The head of the leading rooftop solar company in the U.S. told me last year that one of his top priorities was to strike deals with electric utilities that would make them partners rather than rivals in the changing power sector.
“I’m very interested in finding a utility that we can work with that wants to solve problems, not prevent change,” Lyndon Rive, the co-founder and chief executive of SolarCity, said in June. “It would be learning for both of us.”
Well, Rive got his wish last week as SolarCity and two other solar developers, SunPower and SunEdison, joined six New York utilities in announcing their formation of the “Solar Progress Partnership.”
The group, whose utility members include Consolidated Edison, New York’s biggest power provider, is proposing a transition to a compensation model for solar users that they say would balance the needs of utilities, solar developers and consumers in the Empire State.
“That’s exactly what I was referencing,” Rive said recently of his bid for a deal with utilities. “The solar industry and the utility industry can come up with solutions that work for everyone and that allow for a good transition, one that gets us to a large scale that actually helps the grid and at the same time helps the utility. It’s possible to do it.”
There’s no doubt that such a collaboration is more likely in New York, where state officials have called for sweeping reforms in the electric power sector, than in other states.
In fact, Rive said last year he expected his best prospects for an agreement with utilities would be in New York or California, another state with substantial commitments to green energy.
But Rive, who started the San Mateo, Calif.-based company in 2006 with his brother Peter, says the New York experience will be a model for other states.
“Right now there’s this massive debate between the solar industry and the utility industry,” he said. “The biggest cause of the debate is not recognizing a lot of the benefits that solar provides to the grid.”
The debate has turned into outright hostility in Nevada and other states where regulators have either changed, or may revise, so-called “net-metering” policies. Those policies pay homeowners of rooftop solar systems retail prices for excess power they feed into the grid.
Many utilities argue that net-metering payments are disproportionate and shift costs of maintaining the grid to non-solar customers.
To a large extent, the New York partnership’s work, which requires approval from state officials, would involve defining the benefits of distributed sources of solar energy on residential and commercial roofs and in community projects, and assessing their costs.
The proposal would continue the state’s current net-metering policy until 2020, at which point it would be replaced by a formula that “more accurately compensates for the value of the electricity” sent to the grid from solar sites.
Meanwhile, solar developers would make payments to utilities for new community and remote systems, once regulators agree to the overall plan.
“Solar developers would gain greater certainty over their ability to connect customers to their projects,” the utilities and solar developers said in a joint statement Tuesday. “Electric utilities would have the financial resources needed to maintain a reliable grid, essential to the widespread sources of solar, and solar resources can be better targeted to areas of that grid that need them.”
The partnership proposal was a result of discussions among the participants and state officials facilitated by the Advanced Energy Economy Institute, a nonprofit comprised of providers of renewable energy and energy efficiency systems and some of their large customers.
“If you look at creating energy at the places where it’s needed, it’s a lot more efficient than transporting it hundreds of miles,” Rive said in an interview. “So over the next few years, this gives us time to do all of the customizations with the utilities to really strain out the value that distributed energy brings to the grid, and how they can use it.”
Is SolarCity considering such arrangements in other states?
“Not ones that I can discuss at this moment,” Rive said.
Bill Loveless — @bill_loveless on Twitter — is a veteran energy journalist and television commentator in Washington. He is a former host of the TV program Platts Energy Week.