As the Cost of Panels Plummets, Energy Utilities Rethink Solar

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By Patrick Di Justo
Tech breakthroughs are bringing solar power to the people, and upsetting electric utilities' business models.

It has been the "power source of the future" for at least the past 40 years. It’s one of the few things on which people agree across the entire political spectrum. And thanks to the development of more efficient and inexpensive solar panels and intelligent infrastructure like smart meters and inverters, it looks as though solar power’s time in the sun has finally arrived. The amount of solar photovoltaic power generated in the United States has increased from 16,000 megawatt hours in 2007 to 15,874,000 in 2014. That thousandfold increase has caused electric utilities across the country to either panic or seriously rethink their business model. 

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"In the near future, the question won't be if you have solar, but what kind you have."—Scott Franklin, CEO of Lumos Solar, a solar module company

The chief reason for the disruption is that, unlike most other renewable sources of energy, solar can be controlled at the homeowner level. Lennar Corporation, a major American homebuilder, has been looking at integrating "no brainer" solar—photovoltaic  installations that require next-to-no customer involvement—into their houses since around 2006. Now, when you build or buy in any of their 100-plus SunStreet communities, every single home is designed from the ground up with an integrated solar generating system, which produces 70 percent of their estimated energy needs. 

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Bright Side of History

Recent innovations in solar technology have made photovoltaics drastically more affordable and accessible to individuals. According to the Solar Energy Industries Association (SEIA), a U.S. trade group, the cost of installing residential solar panels decreased 45 percent between 2010 and 2014.

This much generating capacity in the hands of individuals creates an entirely new energy landscape, one that many utilities aren’t ready to handle technologically or logistically. From Wisconsin to Hawaii, utilities are taking what some call punitive action against small-scale solar power, ranging from monthly surcharges to a complete moratorium on new photovoltaic hookups. Michael Hyland, senior vice president of engineering services at the American Public Power Association (APPA), an electric utility service organization, says, "We have an inkling that many utilities will need to review their rates and how they have charged for electricity over the past hundred years." One positive change the APPA sees is the development of what it calls community solar: putting photovoltaics on publicly owned land—near landfills, airports, parking lots—that can be utilized by the entire community. The utility will benefit by not having to deal with multiple owners and installers, and the homeowners will benefit by not having to front the cost of their own solar installation.

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Sun Spots Some homebuilders have already committed to making solar panels standard in all new homes. Lennar Corporation has put photovoltaic installations on thousands of rooftops in more than 100 SunStreet communities in California. The company plans to extend the program to Colorado and Nevada soon.

With social and technological innovations like these, the power source of the future may finally be ready for the present. Or as Hyland puts it, "Electricity drives the economy. It is sometimes thought of as the eighth wonder of the world. So this is really a juicy time to get into the industry." 

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On the Beam

Acknowledging the capacity for individuals to generate their own electricity, Xcel Energy recently unveiled a proposal to add 2,400 megawatts of combined large-scale and residential solar energy to its Upper Midwest system. If enacted, it would cut emissions 30 percent by 2020, and 40 percent by 2030.