I blogged previously about a presentation that, Rod Nikula, VP Power Supply at Wright-Hennepin Cooperative Electric Assn (WH) in Minnesota, gave at this year's NRECA conference that hit on a very sensitive topic among power utilties. Companies like SolarCity, a full service solar PV energy company, offer a financially attractive solar package (that does not involve the local power utility) once the power rate from the local utility reachs 14 cents/kWh or above. SolarCity offers a unique leasing plan that requires no money down. It offers a flat rate for 20 years, and payments are made against savings from the monthly utility bill.
According to Rod Nikula, Solar City is taking 600 homes off the California power grid every month. Mark Vogt, CEO of WH, put two and two together and concluded that "We better find a way to be in the home generation business," or face a serious drop in revenue.
In a report by John Farrell at the Institute for Local Self-Reliance, Rooftop Revolution: Changing Everything with Cost-effective Local Solar, the levelized cost of solar PV power is compared with the cost of power from local utilities. The report conclues that right now solar PV delivers power more cheaply than the local power utility for 10% of residential demand in California, Connecticut, Hawaii, New Hampshire, and New Jersey.
By 2022 it is projected, assuming continued decreases in the cost of solar panels, that solar power will deliver power more cheaply for 10% of residential demand in 49 states, the only exception being Washington State which has the lowest power rates in the United States. Furthermore according to another report Commercial Rooftop Revolution, solar PV installed by businesses is projected to be competitive with at least 10% of commercial power demand in the United States by 2022.
As ponted out in a recent article in IEEE Spectrum, Farrel's asumptions are fairly conservative - the most important assumption is that the driver behind these projections are technology and industrial efficiency. Farrell also assumes that utility power rates will continue to rise about 2% per year. Most importantly, he does not include government subsidies in his projections of the cost of solar PV.
Farrel's conclusion (both of his reports have the word "revolution" in their titles) is that solar PV is poised to dramatically change the electric power industry as we know it. Wright-Hennepin Cooperative Electric Assn (WH) is one of the utilities that has recognized this trend and is trying to do something about it, by getting into the residential solar PV business.