When Judge Green broke up AT&T in 1984, the intention was to introduce competition into the long distance telecom industry. In the end it unleashed new technologies such as wireless, optical fiber, RF/coax, and satellite that made the telecommunications market highly competitive. Subsequently these new technologies have made the old copper telephone system (POTS) legacy. Maybe a similar thing is happening to the electric power industry. In this case the first new technology is renewable energy.
At the NRECA TechAdvantage conference in New Orleans, Rod Nikula, VP Power Supply at Wright-Hennepin Cooperative Electric Assn (WH) in Minnesota hit on a very sensitive topic among cooperative power utilities (and among municipal and investor-owned power utilties as well).
Increasing interest in renewables
Currenly there is 13 MW of solar PV capacity in Minnesota and thisis growing rapidly. A cold climate with sun like Minnesota is better for solar PV than a warm one. One speaker reported that a PV array in Minnesota produces more electricity than the same size PV array in North Carolina.
WH is finding a growing interest in solar PV among its membership. A year or two ago a local broadcaster forecasted that in 10 years, 50% of the average home's power demand could be satisfied by solar PV. That pronouncement got the attention of WH, because it would dramatically affect their revenue stream. A survey by WH of its memberhsip found that while only about 10% of homes had some self generation capacity, 30% of homeowners said they were interested in renewable energy.
Solar City
Looming on the horizon are companies like Solar City, a full service solar PV energy company that can offer a very attractive solar package that doee not involve the local power utility once the power rate from the local utility reached 14 cents/kWh or above. Solar City 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 concludes that "We better find a way to be in the home generation business," or face a serious drop in revenue.
WH is concerned that schemes like Solar City will affect rural areas more than urban, which would mean coops would be affected more than other power utilities. Any coop with rates approaching 14 cents/kWh is at risk. And with new EPA rules shutting down coal fired plants, whch are the primary source of power in Minnesota, rates are expected to go up.
Pilot community solar project
WH decided to pilot a Community Solar Project with partners such as Clean Energy Collective. It provided a way for members who were interested in solar PV at a very low upfront cost (not quite as attractuve as Solar City's package) and in a way that was fully funded by members and required no investment from WH, except for hosting the PV arrays on their property.
The technical solution involved PV panels and batteries. The batteries were an important part of the solution because they allowed WH to store solar generated power long enough to reduce the peak at 6 pm which effectively determines the rate that WH pays for the power it distributes.
The project involved 171 panels at 190 watts/panel, The panels cost members $869/panel (after the Federal clean energy tax credit of 30%). Members could buy several panels up to a maximum equivalent to their annual energy demand. WH controls charging/discharging of batteries.
The pilot project was fully subscribed so the project clearly appealed to the membership. But the downside is that WH doesn't generate any revenue from the pilot project.
WH is planning a follow-on project which it hopes will be a win-win for the membership and for WH. From WH's perspective it needs to find substitute revenue for the lost revenue due to the members' solar PV generation. It is considering selling, installing, servicing, and financing solar PV equipment, offering a battery storage service, and other revenue generating options.
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