Every Rooftop is a Power Plant

In the past couple of months, two solar power articles approach the topic from different perspectives yet result in similar conclusions. The Boston Globe covered the recent MIT Energy Conference in April and described the perspective from a large utility, Duke Energy, one of the top CO2 emitters in the United States. Duke Energy generates 97% of its power from coal and nuclear power, and wants to significantly reduce its carbon emissions. Jim Rodgers, who runs Duke Energy, is seeking the emission reduction through the development of solar power and increased energy efficiency. He was quoted as considering "every rooftop as a power plant", and noting the need for changes to the rules governing power companies to allow them to benefit from solar power by "moving beyond the meter". This means a power company would not only provide energy to a customer but would also share in the cost/profit from energy produced by a customer, leading to increased large scale investments in solar and ultimately reduced emissions from fossil fuel energy.

Selling the Sun by Michael Behar in On Earth Magazine features a story about Jigar Shah and Sun Edison, North America's largest and most successful provider of solar energy, a private business which has grown so quickly over the past five years that it could almost be considered a small utility company. Sun Edison's growth and success was created by their no up-front cost, power purchase agreement (PPA) business model.

Through a PPA, Sun Edison provides solar electrical power at a set price for a minimum of 10-years, with no capital cost to the customer. The PPA's are then used as collateral for investment funding to install and own the solar array. The investors benefit from a constant income stream on debt payment, depreciation and investment tax credits. The early adopters of this approach have been large scale retailers like Staples, Whole Foods, Kohl's, Ikea and Walmart. The avoidance of up-front capital cost with its longer term payback and a stable long term energy cost have created a large market place stimulating the whole solar industry. It is reported that Sun Edison has about 200 commercial installations with a 60-megawatt capacity, or enough to power 48,000 homes. A recent report by the National Renewable Energy Laboratory noted that investment in solar energy in the last three years grew by a compounded annual rate of 145%, and it's clear that the PPA model is substantially the cause of this growth.

The two articles however raise a couple of questions. Will the large scale utilities move into the micro scale, thousands of rooftops, model? Will a business like Sun Edison become more like a utility? When will the cost of solar and utility power, grid parity, become equal? On the last question, many experts project somewhere between 2012 and 2015, but in many parts of the U.S. it is happening now. The same experts note that the real issue may be scale more than subsidies. As Michael Behar's article states, "The formula is simple: the more solar installed, the cheaper it gets; and the cheaper it gets, the more it's installed". There is no doubt about that equation.