Enlightening opinions from US energy commissioners on what they really think about renewables and the electricity industry's incumbents can only be said out loud once they've left their post: a reversal of poacher turned gamekeeper.
Jeffrey Byron was fresh out of the California Energy Commission and on one of one of his first public engagements since enlisting at NRG Energy when he warned of an affliction particular to electric utilities: electrotropophobia. “We have a group of folks that are very difficult to address,” he said last month at a SolarPraxis conference in San Francisco. “You all know them. I refer to them as institutional incumbents – these are the utilities they really are slow to change. They've an obligation to serve that really makes them adverse to these kinds of challenges. So I've developed a term for the institutional incumbents – it's called electrotropophobia. It's the fear of change in the electric power industry.”
Byron admitted he'd taken some liberties with the Greek in devising his neologism: electro- electricity + -tropos, pertaining to a turn + -phobia fear. The second definition he said would be “abject fear of grid operations that must comply with a 33% intermittent renewable energy resource requirement.”
NRG Energy, one of the most progressive power companies in the US, has a power generation of 189 fossil fuel and nuclear units with a capacity of 23,585 MW. But the company is “bullish” on solar with 880MW in its diverse portfolio and a large financial commitment to BrightSource's Ivanpah plant , said Byron.
Byron's boss, NRG CEO David Crane, might well appoint people in his own image. Crane uses colourful language to characterize the US energy industry today and his vision of a renewable future. Last year, Crane quipped that electric vehicles could bring world peace if it reduced US dependence on Middle East oil.
Electrotropophobia hardly trips off the tongue, but it encapsulates a thorny issue in the US electric utilities industry, which seemed happy to embrace wind in their portfolios at a rate of knots because projects are large-scale investment opportunities. But the demotic economics of solar represent a loss of control and revenue that investor owned utilities fear more than perhaps any other policy or technology trend.
NRG Energy's new vice president of integrated solutions for west region said: “Why is overcoming electrotropophobia so important and what do the institutional incumbents have control over and influence over that makes this so significant? Net metering interconnection incentives and the rate structure are all issues that will make or break widespread adoption of renewables. IOUs have a great deal of influence over all of those.
“The development of significant amounts of renewables is going to transform the way the grid is operated in significant ways. The devil is in the second-to-second details.
“We're going to have to find new ways of doing business and new resources are going to have to be addressed in the market design that's why policy is so important.”
Regulators and even former regulators are not the only people to have noticed that the sun doesn't always shine on the relationship between the solar industry and electric utilities.
The Solar Electric Power Association (SEPA) this week announced a newly minted role: vice-president of utility strategy. Eran Mahrer will be focused on “engaging utilities to develop best-in-class solar strategies and practices. He will work closely with utility leaders, regulators, developers and other key stakeholders to position solar energy as a core resource for utilities.”
Utilities have a complicated relationship with solar; their support of utility-scale projects and burgeoning community solar accelerate the market, while their resistance to net metering hinders the residential market.
During a media panel discussion at PV America West, Julia Hamm, the chief executive of SEPA, said: “A big part of SEPA's focus is serving as a bridge between the utilities and solar industries to help them understand each other's challenges and perspectives.
“The utility regulatory structure was put in place 100 years ago based on an electric system that was all large power plants. Rate design was done based on that model. It was not designed based on your customers generating their own power.
“Changing things within the regulatory regime is never easy and it doesn't happen fast. But what are some of the low hanging fruit that can be tackled immediately? What are some of the longer-term strategies that can be employed to gradually make progress over time?
“It's tricky because utilities have to work within a regulatory structure that's just not designed for a lot of DG solar coming from customer generators. So there needs to be a change to that structure.
“It's a difficult thing to tackle. A lot of it is education of regulators to make sure they understand the challenges and can see what the options are.”
Suggesting that the solar industry had pushed hard to defend its own territory on the supply and installation side, Hamm said: “Utilities are not against solar. They are technology agnostic. There are examples of utilities that have been very proactive and said yes, we want to really push forward with a much larger percentage of solar in our portfolio and under our current regulatory regime this is the way we see it making sense for us. But they take it to the public utilities commission and parts of the solar industry are very adamantly opposed to the utilities having a role in that way. Very vocal parties have been able to push the utilities back. In the cases where they're trying to do it, they're being told no you can't do it.”
Rhone Resch, chief executive of the Solar Energy Industries Association which is co-hosting the San Jose conference with SEPA, said: “Historically, there's been a lot of tension in the solar space but we are starting to see great progress in their adoption of the technology and their willingness to work out how this fits in to their portfolio. The regulatory structure needs to be fundamentally looked at and revised.”
SEIA last week released a joint report with GTM Research, which showed that solar PV installations reached 1,855MW in 2011 – well above the 1GW annual milestone, but a long way from SEIA's target of 10GW annually by 2015.
A competitive industry is key to achieving these growth rates, said Resch.
“Competition is a foundational principle in a free market economy and when you don't have competition it leads to gross inefficiencies. There's less of an incentive for companies to change if that's the way it's always been.
“For the small solar installers who are trying to come in and provide competition you can understand why there's resistance to that. But that resistance has got to stop. It has to change. We do a have a regulatory structure that is antiquated and we have an energy infrastructure design that is no longer consistent with what our energy needs are.”