3 reasons why utilities should not be so disgruntled over PV rooftops

I decided to stop my recipes on PV projects this month. We all seem to enjoy seeing more and more of programmes about cooking on TV, but we should also have some change to it. I would like to go back to a topic that I have addressed in one of my earlier articles: PV rooftops. Utilities are particularly worried with the rooftops and specially when no subsidies are involved as it is the case right now in most countries. Utilities fear the canibalization of their revenues and in particular for most of the Asian countries (and not only in Asia) that the slice of the paying consumers better-off will be the ones interested in installing PV rooftops due to expensive electricity bills. This happens mostly due to cross subsidies and without actually removing them, the problem is not on PV rooftops, but on the structure of subsidies.

Let us look at 3 reasons why PV rooftops are a good opportunity for utilities.

Reason 1: PV rooftops only work with on-grid support as off-grid or fully autonomous systems are much more expensive. That means that the legacy of the transmission and the grid has a value and so any household will need grid support and that has a value. Customers will not go away. The legacy network in the utilities is one that will also not go away or be replaced by optical fibers as it was the case of the telecommunication, where the ubiquitous copper wire bode farewell when the optical fibres penetrated the last mile or even wireless came up. Electricity will be on cables and having it without cables is a nightmare of radiation and health issues that obliterate the discussion on mobile 4G effects! So, bank on your legacy for the service that makes a solar rooftop work.

Reason 2: PV rooftops will avoid utilities having to invest into new transmission lines or even upgrade your network. If you have generation at the end of your distribution network, why should you be bothered to increase the capacity of your backbone? That saves you money, trouble and time also. Rights of way (ROW) in cities are a nightmare for anyone who has been involved in doing it. Now imagine going for larger towers, lower sagging of lines when the previous setup was already an issue! So, maintain the grid, let the consumers do the generation and make sure that you provide them with the service they are looking for: grid, reliability and back-up power supply.

Reason 3: PV rooftops may be cheaper than your grid based electricity. The utilities must understand the opportunity of buying cheaper power and reselling it to other customers. That can be done through solar or green tariffs, which can even go for a premium. If solar is more expensive than the grid, no PV rooftops will work unless subsidies are provided. That covers the utilities in the first instance, but is usually followed by the downside effect leading to a stagnation in the market (see “Is net metering the right way forward for PV rooftops in Asia?”). It is also the point where utilities must also embrace the age of the platforms. Consumers will buy and sell power through the utility platform (and if utilities do not get this, another UBER will surface). An owner of a flat in the center of a city will have no chance of having a PV rooftop enough for its consumption, so that is where bigger rooftop owners come into the picture, more likely not in the center of the city, but around it. The same person in an office may be selling power to the building where that same person is working! For that you need a platform and the wiring. Utilities have the latter and usually all paid for already. Technologies as block chain and others are there to enable the next revolution: selling and buying power online, on the spot market. Utilities just have to enable it and profit from it. Eventually even considering being generators or signing PPAs with larger rooftops so that their network can actually have more options than just the grid from the perspective of the utility scale power plants with the associated back bone transmission costs.

If you have (i) something that your clients need and will be needing, (ii) if you have the possibility to decrease your operating costs and optimize your investments in distribution infrastructure and (iii) if you can have cheaper electricity than what you are buying right now, what is your problem?

For the consumers reading this article, do not get excited right now. It is more likely that utilities need to be punished a bit further so that the D- day arrives. When it does, we will see a different world emerging with us all being a much more active part of the conversion towards a greener, cleaner and safer world.