By now, most people are aware that solar power — particularly distributed solar power, in the form of rooftop panels — poses a threat to power utilities. And utilities are fighting back, attempting to impose additional fees and restrictions on solar customers. These skirmishes generally center on “net metering,” whereby utilities (forced by state legislation) pay customers with solar panels full retail price for the power they produce, which can often cancel out the customer’s bill entirely. That’s lost revenue for the utility.
Net metering, however, is largely a distraction, a squabble over how long utilities can cling to their familiar business model. Larger reforms are inevitable, because the threat to utilities goes far beyond solar panels and demands a response far more substantial than rate-tweaking. Sooner or later, there must be a wholesale rethinking of the utility business model. And if utilities are smart, they’ll do it sooner.
To understand why, let’s have a look at two recent analyses. One examines the short-term issue for utilities, revealing the core problem lurking within. The second pulls the lens back to take in the big picture.
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