SolarCity Moves Toward Becoming a Utility

The world is moving toward distributed energy, but most utilities aren’t, so SolarCity is moving to fill the gap, potentially becoming a 21st century utility.

Today, SolarCity announced GridLogic – microgrid-as-a-service – where they design and operate a custom turn-key system that combines locally-produced solar, batteries (from Tesla) and energy management.

"The microgrid product is basically a culmination of all of the technology that SolarCity’s been developing over the past eight years" … and is "a template that can be scaled up to basically be the next-generation grid," co-founder Peter Rive, told the NY Times.

Rive says an aggressive utility could manage its system much more efficiently using distributed resources, but since they aren’t stepping up, SolarCity sees it as an opportunity.

Since Superstorm Sandy, affected cities, states and the military are prioritizing development of microgrids – distributed energy sources that keep energy flowing during blackouts on the grid.

Hospitals were flooded during the hurricane, for example, and even the sickest patients had to be evacuated. Now, about 200 hospitals use cogeneration and many are developing microgrids.

blackouts

Like SolarCity’s leasing model for solar systems, customers can either finance the system or choose monthly fees with little or no upfront cost.  

Initial targets are municipalities, campuses and military bases in North America, but this is their first international service, available to communities anywhere.

So far, microgrids are being formed by piecing together equipment from various vendors. The only total solutions offered are massive, expensive ones from Siemens or General Electric. Spending more than $10 million doesn’t work for many communities, especially if they are used primarily for backup,  Jonathan Bass of SolarCity told San Jose Mercury News.

Another reason for the microgrid service is to hedge their bets against the expiration of the 30% solar investment tax credit. If Congress allows it to expire after 2016, it could take a big bite out of SolarCity’s current business model.

Where the action on microgrids is:

By 2018, the US will have 1.8 gigawatts of microgrid capacity, forecasts GTM Research, valued at more than $3 billion.

Read our articles, NY State Moves to Implement Transition to Distributed Generation and Consortium Forms to Accelerate Microgrids in US.

Goes to Court in Arizona

SolarCity is suing the Arizona utility, Salt River Project, for its new pricing plan designed to punish customers who choose to go solar. 

Utility customers who generate their own power have to pay hundreds of dollars a year for "distribution charges" and "demand charges" that apply only to them.  

The lawsuit asks the Arizona federal court to halt the utility’s  anti-competitive behavior.

"We can already see the intended effects: After the effective date of Salt River’s new plan (December 8, 2014), applications for rooftop solar fell 96%," says SolarCity. 

"We would much rather devote our energy and resources to the business of building, selling, and leasing solar energy systems that Arizonans want. But we will not sit idly by while Arizona and its reputation as a business-friendly state bear the heavy burden of unlawful abuse of monopoly power."

Meanwhile, Arizona utilities are looking to compete with SolarCity. Tucson Electric Power has regulatory approval to install residential solar systems using the solar leasing model, plus a $250 administrative fee. Arizona Public Service Company plans to spend $28.5 million on a research project where it would own the solar system and pay customers $30 a month for the use of their roof.

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