As continuously improving technology is causing the price of solar power to drop dramatically, the idea of installing solar panels on a home or business makes increasing sense. After all, goes the reasoning, why pay a utility to provide you power when you can generate it yourself? Sounds eminently reasonable, except that just because you can do it, it still may make better economic sense to get your electric utility to provide it if you can.
Up until recently, if you wanted to have solar power, you had to generate it yourself because your local utility didn't have any solar generation capacity. Because of that, an entirely new industry has appeared out of nowhere. Not only that, but various tax credits have been available to make the cost of solar power more attractive.
The very technology that is making solar so affordable for individual homeowners and businesses has now made it attractive for public utilities to build large scale plants. The cost of building and operating a solar power plant is now less than the cost of a new coal-fired plant. Given those better economics, as well as growing public opposition to coal-fired plants, more and more utilities are building out solar generation capability. Not only that, but the improved economics of solar now makes it very competitive with natural gas fired plants.
Not only is the cost of building utility scale solar power plants decreasing, but the potential of battery storage makes solar even more attractive for the typical utility to consider.
All of this could result in a big surprise: the best place to get solar power may be the local electric power company you've come to hate! Lots of people have a great disdain for the power company. After all, they're the people who've built all the coal-fired plants that belch out not only noxious fumes but also loads of greenhouse gases. Their "solution" to coal has been natural gas plants. The latter admittedly have much less greenhouse gas emissions, but still quite a lot. Not only that, but electric utilities normally are government granted monopolies. The consumer doesn't have much of a choice.
Better solar technology is creating the potential for surprise. More and more utilities see that solar power makes sense and are replacing coal and natural fired plants with solar. That means more and more utility customers will have a choice of generating their own solar power or relying upon a local utility to do it. The can't do anything other than benefit the consumer. Let's consider why.
As previously noted, home owners and small businesses haven't had much of a choice. If they wanted solar power, they had to invest in their own system, then get a contractor to build one for them. In recent years, the market has seen to appearance of companies that install and finance complete turnkey systems. One such company is Sunnova.
Sunnova has 65,000 customers in 22 states plus Guam, Puerto Rico, and the Northern Marianna Islands. The company has raised $ 2.5 billion from investor since 2012. According to the company's website, the typical customer has saved 20% on energy bills after installing a system.
Sunnova isn't so much a solar manufacturer and installer as it is a financier. The company instead has established a network of what it calls "channel partners", companies that do manufacturing, sales, and installation. Sunnova has created a profitable, fast growing business using this model. Others have done the same.
That model works very well until something goes wrong. When the solar panels "leak", or there are unexpected charges showing up on bills, customers find themselves caught between the solar companies, which refer them to contractors, and the contractors advising them to call the solar company. A little bit of good old-fashioned finger pointing! Chances are, you've experienced the very same annoying, frustrating problem at other times with other products.
Sunnova has had a number of problems in this regard. The Houston Chronicle reported on problems Sunnova has had in Puerto Rico and Houston. It got so bad in Houston that the local Better Business Bureau voted unanimously to revoke Sunnova's accreditation, a designation that a company adheres to the bureau's standards of business ethics. Ouch!
One might still want to give Sunnova the benefit of the doubt, or maybe attribute the problem to growing pains. After all, the company has been growing rapidly, so service problems in any particular market are not necessarily unusual. But even if this is a "one off" problem, and Sunnova is otherwise a very good company, the business model may not make sense in the long run, for two reasons.
The first reason has to do with economics. Utility scale solar power is likely much more economic than individual home solar installations, especially if the home installation is a retro-fit. The per unit cost is likely to be much higher, and if the homeowner gets his or her own system, they'll have to cover the capital cost of the system. If there's a choice, having the utility finance the system is likely more economical.
The second reason gets down to the problem of service. When something goes wrong, if the homeowner owns the system, he or she has to deal with the finger-pointing problem described earlier. On the other hand, if the utility owns the system, they'll have to take care of it. The good news is that electric utilities are generally very good with service. Certainly not always, but most of the time.
Perhaps the best solution of all is to create a truly competitive marketplace. That would mean giving the homeowner or small business a choice of purchasing solar power either from the local utility or from a company such as Sunnova. Marketplace competition will help ensure customers get the best deal. Now the local utility will probably oppose giving consumers a choice. That's not surprising given that the average electric utility is a monopoly, and the people that run them still think and act like monopolists. Unfortunately, monopolies always seem to produce less cost effective solutions for the customers. As such, a better solution would be to give the customer a choice of getting solar power from the utility or from one's own rooftop via a supplier such as Sunnova. Yes, there's a high probability the utility will produce at a lower cost, but there should still be a choice to make.
The best outcome would be for the price of solar power to continue to decrease, and that will likely occur through ever better technology. As solar panels and battery storage continue to get better, the price should continue to fall. An ever lower price makes alternative energy ever more attractive. As that happens, the likelihood that your local power company's next plant will be solar increases commensurately.
It won't take government regulation to make solar more attractive, but government regulation could get in the way. Government can be most effective if it encourages ever better solar technology, does a good job regulating electric utilities, and letting a competitive marketplace for solar power emerge. It might be surprisingly positive for everyone.
