Solar Market Growth and Federal Regulators

a guest post by Ken Whiteside, Director of Business Development at ONTILITY, LLC.

The recent publicity surrounding net metering policies at several utilities, notably Xcel in Colorado and Arizona Public Service, has led some to ask whether or not FERC, the Federal agency that regulates wholesale electricity, is paying attention to distributed generation, especially solar, and the impact it is having on utility companies. Following recent comments by FERC Chairman Jon Wellinghoff to GreenTech Media in a sideline conversation at the National Clean Energy Summit in Las Vegas, there should be no doubt; FERC and Mr. Wellinghoff are paying attention.

And well they should. Solar is growing so fast it cannot be ignored. The very fact that utilities are pushing back on net metering policies tells us that solar market penetration is becoming significant. According to a recent report published by GTM Research and the Solar Energy Industries Association, 68 percent of the cumulative solar PV in the U.S. was installed in the past 2.5 years, and the industry is on track to more than double that cumulative total by the end of 2015.

Solar Market Growth and Federal Regulators

"Solar is growing so fast it is going to overtake everything," Wellinghoff said. "If a single drop of water on the pitcher’s mound at Dodger Stadium is doubled every minute, a person chained to the highest seat would be in danger of drowning in an hour. That’s what is happening in solar. It could double every two years," he said.

"Even though the FERC oversees wholesale markets, utilities, and other jurisdictional entities at the wholesale level, the consumer needs to be our major concern," Wellinghoff continued. "If FERC does not ensure the grid is ready to integrate the growing marketplace demand for distributed solar and other distributed resources, we are going to have problems with grid reliability and overall grid costs."

While transmission infrastructure will be able to keep up with solar growth, big changes will take place at the distribution level where FERC has less influence, Wellinghoff explained. The commission has been examining the costs and benefits of distributed generation (DG) in wholesale markets, however.

"Rate structures need to be formulated in ways that fully recognize the costs and benefits of distributed resources," Wellinghoff said. "In many utility retail rates, a disproportionate amount of the fixed costs are recovered through a variable rate. That is problematic when a lot of people go to distributed generation."

The net metering controversy this has caused at utilities like Xcel and Arizona Public Service, he said, can only be resolved by "the fully allocated, fully analyzed cost and benefit study of distributed resources."

Clearly then, the chairman of FERC is paying attention. Solar has come a long way in a very short period of time: from the realm of a few early adopters to a major topic of conversation among utility company executives and Federal regulators.

Ken Whiteside photo Ken Whiteside has been a fan of solar energy for decades. His first hands-on experience was installing solar on off-grid houses around Telluride, Colorado in the 1990’s (summer in the San Juan Mtns. - somebody had to do it). From his home in Austin, Ken writes and works for widespread adoption of solar electricity, smart energy production and use, and sustainability.

The opinions expressed by authors herein and those providing comments are theirs alone, and do not reflect the opinions of Graybar Electric Company, Inc. or any employee thereof. Graybar Electric Company, Inc. is not responsible for the accuracy of any of the information supplied by the authors or commenters. All the information on this website is published in good faith and for general information purpose only. Graybar Electric Company, Inc. does not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information you find on this website, is strictly at your own risk. Graybar Electric Company, Inc. will not be liable for any losses and/or damages in connection with the use of our website.