While a recent report cast doubts on the idea of a “utility death spiral,” utilities are still clearly concerned about the rise of rooftop solar. Fights around the U.S. over net metering have underlined the fact that utilities are worried rooftop solar will eat into their profits.
If Australia is any indication, U.S. power companies may have cause for concern. More than 1 million Australian homes have solar installed. To put that figure in perspective, that’s over 1 in 10 households. In some areas solar is even more concentrated, with penetration as high as 1 in 4 households.
The result: Fueled by energy conservation plus investments in solar, “electricity consumption in Australia declined by a total of about 13 per cent over the past three or four years, something that would have astonished people if you’d said that five years ago,” analyst David Leitch told ABC Online. That’s led to price increases for non-solar electric customers, making solar even more attractive. Sound familiar? It does look like at least the beginnings of the utility death spiral.
Despite the Australian government doing away with a carbon tax, and continuing to invest in coal, the Australian people are apparently showing no signs of slowing their solar adoption.
What does this mean for other countries?
So far, the U.S. has seen a different kind of problem in states with increasing solar grid penetration. New Jersey’s residential solar market was temporarily glutted, because projects there depended rather heavily on solar renewable energy certificates (SRECs). The increase in projects saturated the SREC market, sending prices down enough to dampen customers’ appetite for solar. A 2012 law increasing the number of SRECs utilities must purchase, plus other legislation being considered, should encourage the market there to continue growing.
For now, solar in New Jersey accounts for at most 2% of the state’s electricity supply. But that’s just a start for a state that seems determined to keep its name near the top of the solar states list.
California, the top solar state, more than doubled its rooftop solar installations last year to 2000 MW. To give an idea of how much solar adoption there is speeding up, it took over 30 years to install the first 1000 MW of rooftop solar in California.
California so far has about 140,000 – 160,000 solar homes. In a state with over 6 million single-family homes, that’s still not a high percentage — but in California, as in New Jersey, solar adoption is continuing to increase.
Meanwhile, in Hawaii, that state’s major utility has been arguing that increased grid penetration from distributed solar will cause technical problems. Hawaiian Electric Companies (HECO) claims that high residential solar adoption there, already 10% on Oahu, is a serious issue. It’s unclear how much the grid can handle (a National Renewable Energy Laboratory report last year arrived at 20%, but HECO would appear to disagree). But HECO claims it’s at the problem point already, and in reaction has implemented a number of roadblocks to installing solar.
However, with storage solutions perhaps not that far down the road, it may not be long till the Hawaii grid is able to soak up whatever distributed solar is fed into it. Add to that a mandate for HECO to deal with the penetration issue, plus very high prices for electricity in Hawaii, and we could soon see a situation there akin to what’s happening in Australia.
Other states may not have achieved grid penetration levels this high from rooftop solar, but with solar exploding the way it has been, we’re likely to get there before we know it. Last year, a solar system was installed in the U.S. every 4 minutes, and GTM Research predicts this will shoot up to every 2.4 minutes in 2014. With polls throughout the country showing that Americans overwhelmingly support solar, and more financing options like solar loans, we may soon find that all the solar that’s been installed so far is just the tip of the iceberg.
For now, we’ll keep watching Australia to see if the utility death spiral has indeed been set in motion there.