ORIGINAL REPORTING: Utilities looking for solar-friendly business models
As solar booms, utilities look to build new business models with strategic investments; Beyond simply contracting for solar, utilities are increasingly investing in the sector to ‘position themselves to be the utility of the future'
Herman K. Trabish, March 14, 2017 (Utility Dive)
Editor’s note: Solar growth is slowing for a variety of reasons, not the least of which is a looming import tariff expected to be imposed by the International Trade Commission that would drive up solar costs.
Utilities are looking beyond contracting for new solar capacity and increasingly moving into the sector as prices fall and demand rises. Solar added a record-breaking 14,762 MW of capacity in 2016, nearly doubling its 2015 growth. The resource added 39% of all new U.S. generation capacity in the year, making it the leader among all resources for the first time. And growth was dominated by utility investment in 2016, a trend that’s expected to continue, according to the U.S. Solar Market Insight 2016 Year In Review. Utilities will provide two-thirds of the 13.2 GW of solar capacity forecasted for 2017 and remain a significant part of the expected tripling of solar deployment over the next five years.
Solar’s cost competitiveness will continue to drive growth, particularly with utilities. The review’s authors expect solar to get 8% to 10% cheaper than its present $1/watt each year for the next few years and likely fall to the low $0.80/watt range in 2020, making it competitive with natural gas and other generating resources without the federal investment tax credit. As solar has gotten more cost competitive, voluntary procurement — solar investments not driven by a government mandate — has become a more significant part of the market for utilities and corporate customers alike and those procurements are expected to increase. Lower prices are also attracting utilities to previously-unfamiliar parts of the solar market and, as solar’s price continues to decline and utilities gain familiarity with the distributed energy technologies, analysts see these strategic investments in the solar and DER sectors as a key strategies for companies to diversify their businesses and access new markets for growth… click here for more
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