Imposing fees on those who install solar panels might make sense in the short term, but over the long haul this tactic could undermine utilities’ critical relationships with their residential and commercial customers.
A better approach would be to embrace the trend toward solar power by promoting arrangements in which utilities lease customers’ rooftops to install utility-owned solar panels.
By leasing the customer’s rooftop solar capacity, the utility actually enhances its ties to the customer. The utility can say, 'We’re not just a power provider anymore; we lease part of your roof.’
Imposing flat fees on solar users tends to draw fire in the media and among activists even as it frustrates customers who want to leverage the technology.
That would be fine if new competitors were unable to jump into the marketplace, but quite the opposite happens to be true.
Indeed, if utilities fail to “get ahead” of the demand for rooftop solar, their hungry, third-party competitors will be more than happy to take the lead.
Of course, if the customer goes off the grid entirely, the utility also loses that long-term relationship. Leasing deals, by contrast, actually preserve and strengthen the utility-customer relationship.
Some of the new sources of competition in today’s increasingly diverse energy industry, including so-called retail electric providers, function a lot like utilities but without the need to generate power.
These entities do nothing but broker power from various sources—solar, wind and natural gas included—and develop customer bases. They represent serious competition for conventional utilities.
Meanwhile, commercial operators with millions of square feet of rooftop space are also getting more interested in alternative approaches to power generation. The likes of Walmart, Costco, Kohl’s, Apple and IKEA, to name a few, are leading adopters of rooftop solar.
Since utilities are already creating large solar farms in rural areas, their next step might just be to lease large rooftops—some can be up to 1 million square feet in total area—in commercial or industrial districts.
With time, the proliferation of competition in the energy sector, along with evolutions in microgrid technology, energy storage and solar panel efficiency, will likely make rooftop arrays cheaper and easier to install for both commercial and residential customers alike.
We suggest that utilities follow the lead of U.S. retailing by embracing consumer choice. Across the retail sector, the best chains have learned to embrace ‘omnichannel’ approaches.
Rather than simply sell goods in a store, they now leverage a wide variety of channels. Utilities, in other words, could give their customer a wide range of energy options, from leasing their rooftops, to buying into community solar gardens and more.
Getting involved now can also help utilities protect the integrity of the grid, because this gives them more knowledge and input about its evolution.
With the U.S. energy model drastically changing, being an integral part of those changes is a better way to regulate the quality of service you provide. Ultimately, this will help you build even stronger relationships with your customers and investors.