Utilities push forward with strategic investments in large-scale solar
As the political winds in Washington seem to be blowing towards the increased use of coal and nuclear energy, the electric utility industry is doubling down on the power of the sun for a very simple reason.
“The cost of solar has gone way down,” noted Richard McMahon, vice president of Energy Supply and Finance at the Edison Electric Institute. The price for a kilowatt-hour of electricity on a utility scale has been cut in half from more than $4 an hour in 2010 to about $2 in 2015.
Photovoltaic panels have become cheaper to build as federal tax credits help spur the rise of solar. Solar has already achieved grid parity pricing with fossil fuels in some markets, which is drawing and holding the attention of several large utilities.
“It’s the utilities you would expect. They’re based in California, Hawaii and Arizona, but increasingly you’re seeing it in other parts of the county,” McMahon told Daily Energy Insider.
A recent report published by the Smart Electric Power Alliance (SEPA) charts a growth rate of 84 percent in 2016 for utility-scale solar interconnections. The segment includes power purchase agreements (PPAs), utility-owned systems not associated with customer accounts, and merchant power plants connected to the grid and selling into the wholesale markets.
The list of utilities adding the most megawatts in capacity include Pacific Gas and Electric, Southern California Edison, San Diego Gas & Electric, and Arizona Public Service in the west. In the east, the major players are Duke Energy Progress, Dominion North Carolina Power and Florida Power & Light.
Federal energy policy defers a lot of the fine grain utility regulation to individual states since energy trading methods vary across the country. Many of the early adopters of residential solar were led there by federal tax credits coupled with state tax credits created by renewable portfolio standards.
As the systems became more efficient and prices dropped the utilities began easing into solar by building their own solar generation systems and through PPAs in which third party developers build the solar farms.