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SolarCity reaches out to rival utilities

When you think about disruption in the U.S. electric power industry, one of the first companies that comes to mind is SolarCity. Since its founding in 2006, the San Mateo, Calif.-based business has become the number-one installer of solar panels on residential roofs, and a villain in the eyes of some utility executives who see SolarCity and its competitors potentially cutting deeply into their electricity sales.

So, it may come as a surprise that SolarCity is reaching out to utility companies and grid operators to form partnerships. “I’m very interested in finding a utility that we can work with that wants to solve problems, not prevent change,” SolarCity’s co-founder and CEO, Lyndon Rive, said in an interview. “It would be learning for both of us.”AP SOLARCITY-SILEVO F A FILE USA CO

What SolarCity has in mind is an arrangement that would enable utilities to draw on solar power from homes and other structures where and when it’s needed, thus smoothing out peaks in demand. Utilities could also use their access to distributed solar systems to help regulate voltage on their systems. The potential for collaboration becomes especially appealing as batteries come down in price and become prevalent fixtures with rooftop solar systems, Rive said.

In fact, SolarCity sells a new Tesla Motors battery that can be combined with a home rooftop solar system to provide backup power in case of a blackout. SolarCity’s chairman is Elon Musk, the CEO of Tesla and Rive’s cousin. So, what’s stopping these kinds of partnerships from forming? To some extent, it’s resistance from utilities to companies like SolarCity, which lease solar systems to homeowners and provide power for less than utilities charge, according to Rive.

Moreover, in many states, utilities are required to compensate homeowners for solar power they generate but don’t use. But just as big of an obstacle, if not more so, are state policies that discourage utilities from entering into the kind of collaborations that SolarCity envisions, he said. Under those policies, utilities make a guaranteed rate of return on their investments in new infrastructure, but not on money that they pay to third parties for services. “It’s so inefficient. Currently, neither party wants to budge,” Rive said of solar providers and utilities. “Neither side wants to show its cards.”


February 2018
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