Utilities: Don’t Let the Clean Power Plan Stay Slow You Down

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Utilities: Don’t Let the Clean Power Plan Stay Slow You Down

If you work in the energy/environmental arena (and haven’t been living under a rock), you know that the U.S. Supreme Court has stayed implementation of the EPA’s Clean Power Plan until legal challenges from more than two dozen states are resolved. Utilities now have a choice: hit the brakes, or the gas? We say put the pedal to the metal! Here are five reasons why.

1. Economics: Renewables are getting cheaper than fossil fuels.

  • This week, the City Council of Palo Alto, California, recommended approval of a 25-year contract for its municipal utility to purchase power from a solar PV system priced at $36.76/MWh, or about 3.7 cents/kWh. To put that in perspective, the average cost/kWh for residential customers in America is around 12.7 cents/kWh.
  • The price of wind energy is at an all-time low. According to a report by Lawrence Berkeley National Lab, utility purchasers are paying, on average, 2.5 cents/kWh for wind contracts negotiated in 2014.

2. Momentum: We’ve hit the tipping point.

  • The U.S. installed nearly 7.3 gigawatts (GW) of solar PV in 2015 – the largest yearly total ever, with utility-scale solar PV installations totaling more than 4 GW.
  • Solar beat out natural gas capacity additions for the first time ever last year, supplying 29.5% of all new electric generating capacity in the U.S.
  • 8.6 GW of wind power capacity was installed in the U.S. in 2015. Wind accounted for more than 35% of new generating capacity last year.

3. Inevitability: While the pending presidential election and Supreme Court nomination make it by no means certain, the Clean Power Plan could pass within the next two years anyway.

  • Plus, many states that have been working on their own plans for compliance for some time are not letting up. Eighteen states issued public statements in support of the Clean Power Plan the day after the Supreme Court’s stay.

4. Support: Consumers want their utilities to transition to renewable generation.

  • While speed and cost are certainly still up for debate, we heard a diverse mix of utility customers in recent focus groups (business decision makers, along with both liberal and conservative residential customers) express the opinion that “coal is the past and renewable energy is the future.” Belief in climate change is now firmly mainstream, and reducing air pollution and carbon emissions is the prudent thing to do.
  • In our 2015 Energy Pulse study, we found that 65% of Americans now agree that climate change is occurring and is primarily caused by human activity, and …
  • The perceived importance that electric utilities generate or purchase at least some of their power through renewable energy sources has increased dramatically (72% of respondents said it was important/very important, compared to 61% in 2014).

5. If you don’t do it, they will: Americans LOVE (and want) solar.

  • In Energy Pulse 2015, we asked 626 likely new homebuyers what features they wanted their new homes to have. Thirty-six percent said they wanted solar panels, and 24% said they wanted an energy storage system to store excess energy produced by their solar panels. In addition, 8% of current homeowners said they’re likely to add solar panels in the near future.
  • And many homeowners already are: According to SEIA, total residential solar capacity surpassed more than 2 GW for the first time ever last year.
SEIA solar installation graph

SEIA charts the growth of solar PV installations.

 

We know that poor roof alignment and bad credit will prevent many of those aspirational homebuyers from getting their solar panels. But with declining pricing, zero-down financing and leasing options, cost is not the barrier it once was (except in Nevada). We also know that distributed solar is more costly than solar that utilities can produce for their customers. So utilities need to start making that case and accelerating plans for new solar service options that satisfy customer desires and keep them in the game.

In short, our message to utilities is this: don’t let what could end up being only a temporary reprieve make you miss an opportunity to protect your customer relationships and improve satisfaction. See this as the opportunity it is, and keep rolling!

Skills

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Posted on

February 24, 2016

About the Author

Lee Ann Head

Lee Ann Head

Lee Ann is a former contributor to Shelton Insights.

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