SolarCity Now A Utility

SolarCity, which specializes in rooftop solar energy panels, has long accused utility industries of monopolistic practices that discourage the change necessary to expand power options.

Until now.

SolarCity announced March 16 that it has developed a system called “Grid Logic” that will use software and conventional generators to maintain the flow of power to its standard solar panels, and will store the energy its panels generate in batteries manufactured by Tesla Motors.

Homeowners with rooftop solar panels can still use the devices for their day-to-day electricity needs, the company says, but SolarCity’s goal is to have a generous supply of power in storage if a hurricane, an earthquake or another natural disaster strikes.

Related: Can Utilities Survive 21st Century Energy Market?

“There has been a dramatic increase in severe weather events the last few years – climate-related, almost certainly – and it’s led to more grid outages,” SolarCity spokesman Jonathan Bass told the San Jose (Calif.) Mercury-News.

As a result, the company is working to bring its new service to cities that are especially susceptible to such emergencies.

"Traditionally, microgrids have been used in campuses, medical facilities and military bases, and we will pursue some of those opportunities if they become available," said Daidipya Patwa, who is in charge of SolarCity’s microgrid program. “But our primary target is municipalities, communities and areas with a weak grid or no grid at all.”

Related: Utilities Stumbling Into A New Dawn

And that, of course, would make SolarCity a utility – not a big one, such as Pacific Gas & Electric or Duke Energy in Florida – but a utility nonetheless. And despite the company’s past hostility to such companies, it now shrugs off this new expansion as a natural part of its own evolution.

“The microgrid product is basically a culmination of all of the technology that SolarCity’s been developing over the past eight years,” Peter Rive, the company’s co-founder and chief technical officer, told The New York Times. He called it “a template that can be scaled up to basically be the next-generation grid.”

Related: Can Tesla’s Latest Venture Live Up To The Hype?

Rive said the company’s leaders are convinced “that if there was a utility that was particularly aggressive, they could manage their distribution system far more efficiently through distributed resources.” That idea, he said, naturally led to the question: “Well, why don’t we actually run the grid?”

SolarCity is among several similar companies seeking to expand their roles, but as much as they’re driven by what they see as a need for clean energy, some observers say they’re also motivated by a change in a tax credit for solar investment, due in December 2016, which, unless it is renewed, will be cut from 30 percent to 10 percent.

“The pressure of the step-down from 30 to 10 percent, I think, is driving people to say, ‘I need to get big, and I need to be the best at what I do so that I am a winner if the tax credit is not extended at 30 percent,’ ” said Nat Kreamer, chief executive of Clean Power Finance, which provides software and financial services for businesses like SolarCity.

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:

• A New Season Brings Big Changes In Energy
• The World's 10 Biggest Solar Farms
• Florida Utility To Buy Coal Plant For $520m, Then Shut It Down