WTI Crude

Loading...

Brent Crude

Loading...

Natural Gas

Loading...

Gasoline

Loading...

Heating Oil

Loading...

Rotate device for more commodity prices

Breaking News:

Winter Pushes Gas Prices Up

Alt Text

Morocco Pushes Huge Renewables Agenda In Disputed Western Sahara

Morocco’s renewable energy agenda is…

Alt Text

India To Ramp Up Solar Investment In 2017

India is making the push…

Utilities Just Declared War On Solar

Utilities Just Declared War On Solar

Now that solar power is reaching prime time, the fossil fuel industry is doing all that it can to stop its growth.

For many years solar was on the periphery, installed by early adopters and helped along by government subsidy. But over the last several years, solar has emphatically become mainstream. It is still growing from a low base, but it is now one of the most preferred sources of new electricity generation. The cost of residential solar have been cut in half since 2010, and utility-scale solar has achieved even greater cost declines.

In 2015, the U.S. saw 16 gigawatts of new renewable energy capacity installed, which accounted for two-thirds of the total. Solar alone accounted for about one-third of new capacity last year. Natural gas only captured 25 percent of the newly installed capacity despite several years of incredibly low prices. The banner year for clean energy occurred while 11 gigawatts of coal-fired electricity came offline as old plants were retired amid rising costs and stricter environmental regulation. The clean energy transition is very much underway. Related: A Market Collapse Is On The Horizon

But the backlash from incumbent industries has also sprung to life. With solar and wind suddenly eclipsing fossil fuels as a preferred option for new power plant capacity, utilities and other fossil fuel interests are moving quickly to disrupt the progress of clean energy.

The industry argues that homeowners with solar must pay fees to cover their costs of using the grid. Solar proponents dismiss that argument, pointing to the costs saved by not needing to build new power plants.

However, the threat that solar poses to the utility industry is deeper than customers no longer needing to purchase electricity. Building new power plants and other large infrastructure is at the core of utility industry’s business model. Since those costs can be passed onto the ratepayer in the form of regulated rates, building expensive infrastructure is actually a source of profit. Customers switching to solar ends up hitting the utility’s bottom line twice by no longer buying as much electricity and upended the utility’s case for costly new power plants and transmission lines.

That is why utilities have become much more aggressive in beating back solar. One of the most high-profile cases is in Nevada, where a NV Energy, subsidiary of Warren Buffet’s Berkshire Hathaway, convinced the Nevada Public Utilities Commission to abruptly and harshly alter the rules of the game for solar power in the state. Related: Struggling Venezuela Buys U.S. Crude, But Who Will Pay for It?

Not only did state regulators gut the net metering payments to homeowners with solar on their rooves, but they also refused to grandfather in those that have already signed up or purchased solar panels on the basis of the net metering rule. Homeowners with solar will now see their electricity rates increase in the coming years. Some residents may see their electricity bills spike by 300 percent above what they likely would have been had they not purchased solar in the first place. Under the net-metering rules, purchasing or leasing solar made sound financial sense for more than 17,000 homeowners. Now, all of a sudden, it doesn’t.

The move sparked outrage from both homeowners and the solar industry in December when the PUC made its original decision. SolarCity immediately announced its decision to pull out of the state and lay off most of its Nevada workforce. On February 12, the PUC upheld its decision, although it slightly delayed the rate increase for solar homeowners from 4 to 12 years, which was still much quicker than the utility industry had even asked for. NV Energy proposed rate increases for solar customers to be phased in over 20 years.

By the stroke of a pen, Nevada just became a much more difficult place to do business for solar companies. SolarCity’s share price has plummeted by more than 60 percent since the December ruling. Related: Oil Rallies Over 12% As OPEC Rumors Reach Markets

But Nevada is not the only state where the fight to block solar’s rise is taking place. The signs of obstruction abound. In 2013, Arizona regulators slapped a fee on solar customers of $5 per month after a campaign by the state’s utilities. The fee was lower than what the utilities wanted after protests from a collection of solar companies and conservative groups advocating for freedom of energy choice. That fee remains in place, but the state’s largest utility is reportedly looking to submit a request to regulators this year to raise the fee to $21 per month.

Rolling Stone just published a long article on the monopoly power held by the utility industry in Florida, where they have succeeded in keeping Florida a solar backwater, despite the state having the third-best solar generation potential in the country. Unlike most other states, nobody except the utility is allowed to buy and sell electricity, so the power-leasing model that SolarCity has made popular is illegal. "We live in the Stone Age in regard to renewable power," said Florida state Rep. Dwight Dudley. "The power companies hold sway here, and the consumers are at their mercy."

The anti-solar initiatives are spreading around the country. Oklahoma’s utility industry is proposing new fees, which sparked protest in December. Renewable portfolio standards are being rolled back in Ohio, Kansas, and other states.

The fight will only escalate moving forward as solar makes further inroads. Worldwide, the clean energy sector enjoyed a record year in 2015, attracting $329 billion in investment, a staggering figure that is set to rise.

Utilities may be able to buy themselves some time, but as solar continues to see costs decline, more and more people will want to defect from the grid.

By Nick Cunningham of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Kip Drobish on February 15 2016 said:
    I would guess Investor Owned Utilities are driving a nail into their own coffins. As battery storage technologies advance most homeowners that have solar will start to drop the utility service or alternatively they will form neighborhood electric co-ops and run on mini grids where only one customer still buys power from the utility and that customer is the neighborhood co-op. "The stone age didn't end because early man ran out of stones"
  • Don Clifford on February 15 2016 said:
    I thought the problem with both wind and solar is that they are intermittent and thus unreliable. This fact means conventional capacity needs to be available to potentially replace 100% of wind and solar capacity. A standby status for utility funded capacity reduces its cost effectiveness. Call it the law of unintended consequences, or simply a political preference for wind and solar. Just don't call it economical.
  • John Scior on February 15 2016 said:
    One would think if Nevada relied less on hydro power, that perhaps the drought they are experiencing would be felt less in that more water could be retained for public consumption instead of being used to generate electricity. It goes to prove the point that there are indeed solutions to the worlds problems, its just that those with vested interests will use their power and resources to protect their own interests at the expense of the general good.
  • James Hilden-Minton on February 15 2016 said:
    And now fossil fuels must compete with ever lower prices just to stay in the electrical market. How much natural gas do you want to buy at $4/MMBTU or $45/MWh just for the fuel when solar and wind PPAs are in the $25 to $45 range per MWh? It's super for back up, but little esle. Solar costs keeps falling 10% each year. How long can natural gas and coal keep cutting their prices to remain competive?


    And oil, is oil really worth more than 4 times the price of natural gas on a per unit of energy basis? Say NG is at $2/MMBtu and 5.55 MMBtu / BOE, so $11.1/BOE. Thus, the market drives oil under $44.4/bbl. Oil has to compete with natural gas in heat and petrochemical feedstock markets. For the right price differential, you can even synthesize gasoline and diesel from natural gas. So where the price of natural gas goes, oil must follow at some ratio.

    Folks, there is no sustainable price recovery for coal, natural gas, or even oil. The prices of wind, solar and batteries will just keep coming down, destroying prices and demand for fossil fuels all the way. It doesn't matter what your volume forecasts say, the marginal price for energy will be horrible. The marginal price of energy is now driven down by renewables.
  • R Jensen on February 16 2016 said:
    Wind, solar and biofuels cannot compete without government subsidies.
  • Jim Decker on February 16 2016 said:
    I live in NV. It is not the utility that killed the solar rip off. It was the recognition by the rest of us that we should not be subsidizing a total waste of money so a few wealthy people can brag about their roof covered with solar panels.

    Count the real costs:
    land
    maintenance
    interest
    depreciation
    storage
    back up

    Only by ignoring most of these costs do they come up with the low solar costs.

    Only nuclear can replace fossil fuels. The sooner we accept that, the sooner we can move on.
  • John bozeman on February 16 2016 said:
    Simple, really, if you don't want to pay for the utilities backup service, get off web . Renewables can't compete in a subsidy free world.
  • ChasL on February 16 2016 said:
    Same can be said for fossil fuels and nuclear.
    Can you say fukushima Chernobyl or three mile island or Indian point??? Talk about REAL Cost....
    Solar and wind still sound like bargains and there getting cheaper and better every year.
  • PaulS on February 16 2016 said:
    I'm all for solar, but also own stock in utilities. Both sides need to ease up.
    Some utilities have the attitude of crushing solar and many homeowners
    with solar have the unrealistic attitude that they are somehow above the laws
    of nature. You can't expect to sell your excess power to the utility for retail.
    That is just as stupid as the utility bumping the monthly set fee to a ridiculous
    level. Not only that, but a homeowner can't expect to pay double what a rooftop
    installation is worth and have it work out financially.
  • Mike on February 16 2016 said:
    James Hilden-Minton you obviously have vested interest. Don Clifford gets it.

    We are a 24/7 society. Batteries? lol. Apparently someone knows nothing about batteries.

    Our foreseeable future is a mix of services. The main only true reason to invest in alternative energy today is to keep the technology moving forward. The cost of alternatives is very high in comparison to fossil fuels if one considers the true cradly to grave costs.

    As far as the utilities go, we require them. It's like having a car that gets 100 mpg and holds one gallon of gas and thinking that you can put in gas stations every 100 miles. It does not work.

    And the idea that building and maintaining transmission lines and distribution lines is a gold mine? Really? Nobody would stand for them making a mint on those items. It is expensive, but there is no bull market to invest in "wires" companies. Don't be fooled.
  • jeff on February 17 2016 said:
    Lost me at the first sentence "now that solar has reached prime time"

    Meaning half of one percent of our energy consumption? That's prime time?
  • John Smithson on February 17 2016 said:
    It would be nice if the government stayed out of the subsidy business for all forms of energy. Solar and wind would not be viable without subsidies.

    I live in California, and the solar market here is ridiculously overheated. I get calls at least twice a week telling me about the great opportunity. It's almost a scam.

    We saw the same thing with corn ethanol. It doesn't help much at all, and it costs a lot. Same with rooftop solar. The benefits are small, and the costs large.
  • Jc on February 20 2016 said:
    Can't wait for the fossil fuel regime to die, and it will. This world will be 1000% better for most, but not for the select few that profit from fossil fuels and the pollution and wars they bring. And they can't stand that. Luckily, critical mass has been achieved and full scale disruption of archaic utilities and dirty energy producers is near.

    By the way, how many times has dirty energy taken extreme, illegal and immoral steps to stop alternative energies from emerging? Many, many times, so subsidies are JUST FINE to make up for their intimidation, coercion and general depravity. Free market my ass. Dirty energy companies have stacked the deck for years. Buh bye.
  • rbblum on February 20 2016 said:
    In the earliest days of Obama's first term, he stated that 'energy prices would NECESSARILY skyrocket' . . . . the mindset of a progressive against free markets.
  • Harold on February 21 2016 said:
    Solar is nowhere near the leading energy source, and would remain so even if panels were free. 120% backup is still required, so why bother with solar, unless you live in a socialist paradise like USA where the poor pay the rich a subsidy for solar.

    Solar is largely a expensive scam.
  • OH on February 22 2016 said:
    Total desperation of the fossil fuel apologists. Equivalent to standing out side a movie theatre telling everyone Hollywood is bad. With no actual data on subsidies, on prices, on the indirect costs - without calling for a level playing field - the fossil fuel apologists merely make claims based on how they feel about it. Solar and wind have not gotten a free ride at all, rather, they have had to overcome a total bias against. The prices of solar and wind are legitimately low and you guys just cant stand it.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News