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Rethinking Utility Business Plans: Utilities, Regulators & Distributed Solar Generation

Record growth in rooftop solar and other distributed clean energy resources has prompted a national conversation about the future of the electricity business. While utilities increasingly view customer investment in distributed solar as an existential ‘disruptive threat,’ much of that threat is actually a product of the regulatory structures under which our utilities currently operate. Next-generation utility business models and regulatory frameworks will hopefully be used to support the growth of distributed solar generation, instead of trying to stifle it.

We explored those solutions in a webinar with the authors of America’s Power Plan. The Plan brought together more than 150 energy experts to propose a set of policies that can help the United States manage the transition to a cleaner, healthier and safer energy future. Our webinar featured two of the eight contributing authors: Ron Lehr, energy attorney and former Colorado Public Utilities Commissioner, and James Newcomb, program director of Rocky Mountain Institute (RMI).

The panelists offered examples of regulatory models from the U.S. and beyond that would allow – and even encourage – the growth of distributed solar generation. They also discussed the ‘utility of the future’, laying out several options that regulators could consider. One approach that piqued our attention was the ‘Independent Distribution Network Operator’ model, in which the utility would act as a distribution wires company and would earn profits based on performance-based incentives for meeting Commission-defined goals such as reliability, resource integration, emission reduction goals, or cost reduction. That would certainly be a welcome update to the 20th century model that ties utility profits to selling more electricity; which inherently creates a disincentive for utilities to maximize energy efficiency and other load reducing technologies such as rooftop solar.

Given the diverse needs, interests and existing structures of electricity markets in this country, we don’t expect any single model providing a silver-bullet solution. Instead, there is a high probability that we will see a state-by-state patchwork approach to implementing the ideas raised in this webinar. At Vote Solar we are continuing to explore ideas and collaborate with others to advance new utility business models that support a stronger, safer solar powered grid.

Download the slides from the webinar here.

Vote Solar is a non-profit grassroots organization working to fight climate change and foster economic opportunity by bringing solar energy into the mainstream.