Note to Utilities: “Don’t Mess With Solar”
During his campaign, Trump claimed he was going to kill the Environmental Protection Agency. He thumbed his nose at the Paris climate agreement and vowed to end federal subsidies for clean, renewable energy.
That was during his campaign. Now that he’s won, we haven’t heard a peep about energy from the Trump camp.
He has other, more important items on his radar screen: ISIS, Obamacare, immigration, trade deals and – my favorite – infrastructure improvement.
Regardless of what Trump does or doesn’t do about renewable energy, it is still very much alive in the U.S. That’s because there are plenty of state initiatives supporting it.
It turns out solar and wind’s biggest foes aren’t Trump and the feds. A few big utilities have tried to throw their weight around. Let me show you the most recent example.
Florida’s Big Bad Utilities
Florida has four investor-owned utilities: Duke Energy Corp. (NYSE: DUK), Florida Power and Light, a subsidiary of NextEra Energy Inc. (NYSE: NEE), Gulf Power Company (OTC: GLFPO) and TECO Energy Inc., a subsidiary of Emera Inc. (OTC: EMRAF).
Together they spent more than $20 million trying to get a solar ballot initiative passed called “Amendment 1.”
Utilities deceptively touted Amendment 1 as “pro-solar.” But its passage would have allowed utilities to tack additional costs onto the bills of solar customers.
It also would have allowed utilities to pay solar energy customers less money for the extra power they generate and put back on the grid. This could have severely set back or even killed the young rooftop solar business in the Sunshine State.
Surprisingly, the Sunshine State lags behind much smaller states like New Jersey and Massachusetts when it comes to solar adoption. The passage of Amendment 1 would have kept it that way. Fortunately, it was defeated in Florida.
And its defeat sent a strong message to renewable energy supporters everywhere. If you want to keep sustainable energy on track, look to the states.
During the term of George W. Bush, our last Republican president, wind and solar energy deployment grew rapidly. It did this in spite of hostilities at the federal level.
How? Thanks to pro-renewable programs in both blue and red states.
Most Americans are in favor of clean energy. That leaves only one enemy at the state level: utilities.
Why Utilities Hate Renewables
Truth is, rooftop solar is incompatible with utilities’ 50- to 100-year-old business model. Historically, utilities have made money by building power plants and transmission lines.
They can do that only if customers keep buying electricity from them. The minute customers install wind or solar, they threaten that business model.
And customers have started realizing they can produce some or all of their power with wind or solar systems. What’s more, they can even store it for later use.
That’s why Florida’s utilities declared war on rooftop solar. In order to gain support for Amendment 1, they tried a number of tactics.
They told Florida voters that rooftop solar was only for rich people. They said the cost of solar would shift to poor homeowners who couldn’t afford it. That’s simply not true.
Encouraging more solar installations will keep rates lower for longer for all customers as all that excess power produced just goes back into the grid. There are plenty of studies that show utilities’ grids benefit from rooftop solar. And those benefits far exceed the costs.
A utility’s biggest cost savings come from being able to defer building a new power plant or not having to build it period. Given that the average new natural gas-fired power plant costs as much as $1.3 billion, that’s a big bill for customers to pay.
And pay for it they will. Every utility customer, rich or poor, pays for the cost of a new power plant. That’s because the utility will file a rate increase to make its customers pay for the new plant.
In terms of their actions, Florida’s utilities are no different from utilities in other states. They try to throw their financial weight around to buy political power.
The $20 million that Florida utilities spent trying to get Amendment 1 passed wasn’t the only cash they sprinkled around during the election. They dropped $9.3 million in campaign contributions to legislators supportive of their views.
Make no mistake: Influence peddling by utilities isn’t going away anytime soon. But the pro-solar folks have successfully countered it in Florida and elsewhere.
For instance, Hawaii’s power regulators rejected NextEra’s efforts to buy the islands’ primary electric utility. Given NextEra’s hostile view toward solar, this wasn’t a big surprise. Had NextEra’s purchase been approved, it would have lowered the amount Hawaiian solar customers are reimbursed for the excess power they produce and return to the grid.
Texas power regulators are also studying the Florida outcome. That’s because NextEra wants to buy a Texas power utility, Oncor. So what solar customers in Hawaii and Florida avoided could still happen to solar customers in Texas.
So far, every effort utilities have launched against rooftop solar has failed. Even worse, it’s eroded the confidence of their customers and their shareholders.
And it’s no wonder why…
Following the rejection of Amendment 1, the utilities who fought to pass it tanked.
Now, not all utilities are like the four mentioned here. Some are very amenable to rooftop solar.
But most aren’t. So the next time you consider investing in a utility, take a minute to see where it stands on renewables. It will be worth your effort.