Arizona Solar Center Blog

Commentary from Arizona Solar Center Board Members and invited contributors.

While blog entries are initiated by the Solar Center, we welcome dialogue around the posted topics. Your expertise and perspective are highly valued -- so if you haven't logged in and contributed, please do so!

The Devil is in the Details

The evolution of clean energy choices got a jolt this week when APS announced plans to lease customers’ rooftops for the purpose of installing utility-owned solar electric systems to feed power directly into their grid.

It sounds like a sweet deal for the 3,000 homeowners they select to participate in the program.  Despite the fact that they won’t receive direct credit for the electricity generated from their own roofs, participating homeowners will be compensated fairly – more or less -- through monthly payments or utility bill offsets.

It also sounds like a sweet deal for the utility that is suffering a public relations backlash from a year-long battle with solar advocates over rooftop solar fees, property taxes and dark money campaign contributions.

This gamble seemingly comes at an opportune time for APS as a brutal election campaign to determine two new utility regulators is heating up on the airwaves and in print. Nonetheless, the proposal is very interesting in that it allows the utility a chance to walk-their-talk by contracting with low-income homeowners that it contends have been left-out of the solar revolution. The utility can also strategically determine where to place the new units within its distribution system for increased reliability.

The plan lets the utility address a number of issues – some real, some imagined and some of its own making.

The bottom-line is it’s a shrewd business decision that finally gets the utility into the rooftop solar business in a big way. After years of standing on the sidelines this provides APS a real-world test of a new business model it has only dabbled with in the past.  It may not be a model that endures – although APS should know what to expect based on lessons learned from a similar pilot project that has been ongoing in Flagstaff for the past several years.  However, the objective of the Flagstaff project is to study the effect of a high concentration of solar electric systems on a feeder line – while this new plan will strategically bolster the grid.

The proposal puts in place an arrangement that can easily transition, sometime in the future, to sell electricity directly to homeowners if their power demands increase as a result of a societal shift toward electric vehicles. In this scenario, it would alleviate the need for infrastructure improvements to meet the new demand.

Not everybody greeted the announcement with enthusiasm.  The news caused a rift among solar electric companies with some welcoming the news because of the increase business it will generate for their operations, while it left another faction fuming at what it believes is unfair competition in an attempt by the utility to gain control of the marketplace.

This rift illustrates just how much the debate has changed in the last few years.  A decade ago no one cared who produced the solar electron as long as it was clean and green. That is no longer the case.

More importantly though, this proposed program validates the game-changing nature the solar leasing model presents and can be construed as a concession on the part of the utility that the benefits of distributed generation are real and add value to grid.

But, as we all know -- the devil is in the details. On the surface this appears to signal a new direction for the utility as it attempts to play catch-up and avoid the same fate as other industry giants that have succumbed to disruptive technologies in their market sectors. 

Immediate reactions around the state varied from praise to denunciation for the effect it would have on future solar development. Instead, hitting the pause button and letting the proposal’s details emerge in a full and balanced hearing seem to be in everybody’s best interest. After all, if the objective is to benefit the grid, the economy, our air and our health – the outcome is too important to be ruled by a rush of emotion rather than patient reasoning.

Jim Arwood
Communications Director
Arizona Solar Center

Question: Is it unfair for the utility to develop new products or services that compete with the private sector – even though those products/services meet its customers’ needs and preferences?

Fighting Obama?
Victory

Related Posts

 

Comments 3

Jim Stack on Sunday, 03 August 2014 10:21

I think it is unfair for the utility to enter into this area of business when there are very good companies already in that part of the economy. APS has shown what their true goals are and they want to monopolize Solar energy in this area after years of telling us it was too expensive. They offer no added value to customers so why should they be allowed to enter this part of the economy.

I think it is unfair for the utility to enter into this area of business when there are very good companies already in that part of the economy. APS has shown what their true goals are and they want to monopolize Solar energy in this area after years of telling us it was too expensive. They offer no added value to customers so why should they be allowed to enter this part of the economy.
Bill Kaszeta on Sunday, 03 August 2014 20:35

For reference, there are a few more details at:
http://www.aps.com/azsun

But the details are few and the questions many for the 2014 rooftop solar program proposal.

It is not likely that all the PV systems can be of the same size, considering the variety of roofs, etc. But the lease rate is initially fixed ($30/month). Perhaps the Arizona Corporation Commission (ACC) will change this to a value based on area.

During 2013 APS hosted a series of workshops to study the billing issues for distributed generation (DG) (including rooftop solar) with a focus on net metering. The original intent was to study the situation and options, then work on possible billing options, but the workshop never got to specific proposals to discuss. During this workshop APS mentioned a possible “Buy All – Sell All” scenario as regards DG without any specific rates being mentioned for each component.

The 2014 rooftop solar program proposal is essentially a “Take All – Sell All” scenario, with APS investing in the PV systems and leasing the rooftops. Electrically, this will mean connecting the output of the PV system directly to the APS line on the APS side of the electric meter, something that is not presently allowed for normal PV systems (and no offset for useage). Will experience with this direct connection lead to future direct connection possibilities with customer owned PV systems? If so, how will the rates be set?

For reference, there are a few more details at: http://www.aps.com/azsun But the details are few and the questions many for the 2014 rooftop solar program proposal. It is not likely that all the PV systems can be of the same size, considering the variety of roofs, etc. But the lease rate is initially fixed ($30/month). Perhaps the Arizona Corporation Commission (ACC) will change this to a value based on area. During 2013 APS hosted a series of workshops to study the billing issues for distributed generation (DG) (including rooftop solar) with a focus on net metering. The original intent was to study the situation and options, then work on possible billing options, but the workshop never got to specific proposals to discuss. During this workshop APS mentioned a possible “Buy All – Sell All” scenario as regards DG without any specific rates being mentioned for each component. The 2014 rooftop solar program proposal is essentially a “Take All – Sell All” scenario, with APS investing in the PV systems and leasing the rooftops. Electrically, this will mean connecting the output of the PV system directly to the APS line on the APS side of the electric meter, something that is not presently allowed for normal PV systems (and no offset for useage). Will experience with this direct connection lead to future direct connection possibilities with customer owned PV systems? If so, how will the rates be set?
Dale P Carriere on Sunday, 10 August 2014 09:48

In the long run, competition, real competition, is generally a good thing. Competition forces all players to rethink their business models and fall into line with what is best for the general public and the competitors bottom line. I would say the more competition the better. We know utilities are in the monopoly business. After all, it's a money game. Once all players understand the rules the game becomes more interesting, and more challenging. So we, as utility users, need to understand the game rules. Once, we as players in the game start to voice opinions on the rules the rules then become subject to change. At the moment we are the small team on the field playing against the professional hard ballers. Our team needs to build it's strength to becoming not just defensive but also offensive. Then, and only then, will the refs look to our input to the game. So start looking at this as a business. It is, in fact, very much a business. A business you and I are very much involved in. Let's all understand the rules and then change them to our benefit.

In the long run, competition, real competition, is generally a good thing. Competition forces all players to rethink their business models and fall into line with what is best for the general public and the competitors bottom line. I would say the more competition the better. We know utilities are in the monopoly business. After all, it's a money game. Once all players understand the rules the game becomes more interesting, and more challenging. So we, as utility users, need to understand the game rules. Once, we as players in the game start to voice opinions on the rules the rules then become subject to change. At the moment we are the small team on the field playing against the professional hard ballers. Our team needs to build it's strength to becoming not just defensive but also offensive. Then, and only then, will the refs look to our input to the game. So start looking at this as a business. It is, in fact, very much a business. A business you and I are very much involved in. Let's all understand the rules and then change them to our benefit.
Already Registered? Login Here
Guest
Sunday, 24 March 2019

Captcha Image