A U.S. rooftop solar company is facing headwinds as it seeks to build off-grid neighbourhoods that would be less dependent on established utilities.
“The utility industry and its regulators, including California’s utilities commission, have a strong interest in preserving the status quo,” reports the New York Times. But while electric utilities have been allowed to monopolize the power sector for more than a century, Sunnova Energy—one of America’s largest rooftop solar companies— is now putting itself in direct competition with them.
Sunnova “asked the California Public Utilities Commission to let it directly compete with investor-owned utilities to provide electricity to homes in new residential developments as a private ‘micro-utility,’” the news story states.
It’s a business model that is illegal in much of the United States. But the role of utilities in household power supply is changing as homeowners install clean energy technology like solar panels and batteries. “That has led to fierce battles between utility companies and relatively young solar businesses that sell and install rooftop systems for use by homes and businesses,” says the Times.
Sunnova said its rates would be 20% lower than what the state grid offers. “If approved by regulators, the micro-utility model, also known as a microgrid, could undermine the growth of those larger utilities by depriving them of access to new homes or forcing them to lower their rates to keep that business,” the Times writes.
Sunnova says its approach is authorized under a two-decade-old California law that allowed a micro-utility to provide power to residents and tourists at the Kirkwood Mountain Resort. Kirkwood was eventually connected to the state electric grid after the town found the rates were too high, but Sunnova says rooftop solar is now much more affordable.
The company would work with developers to install the panels and batteries as part of home construction in projects with fewer than 2,000 units. Sunnova’s systems would still be connected to the state grid to distribute excess electricity to other utilities, or draw back-up power when needed. But its systems would be owned and operated independently of the state’s major power providers: Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric. Sunnova says its independent operation would reduce monthly electricity costs by as much as US$60 per household, in contrast to recent rate increases by the larger providers.
“People aren’t just going to take getting a bigger and bigger power bill every quarter,” said Sunnova CEO John Berger. “The politics of that are going to demand change.”
The utilities commission has said it will review Sunnova’s application, but the solar company faces an uphill battle against the established utilities, their political capital, and their incentive to maintain a monopoly, the Times writes.
Rooftop solar companies like Sunnova also need to resolve other challenges and stay consistently profitable. Alongside federal tax credits, building and operating microgrids could help them establish a steady source of income. But the Times warns that “that could essentially transform the rooftop solar companies into the kinds of utilities they have long fought against.”