It’s no longer a secret that a majority of Americans support renewable energy over fossil fuels. In fact, according to a 2019 study conducted by the PEW Research center, 77% of Americans support developing alternative energy generation sources as opposed to expanding the use of fossil fuels. This means that the paradigm is shifting; the USA now has public support to decentralize energy generation (i.e. less energy coming from the big, centralized utility companies) and utilize distributed resources such as wind and solar (i.e. power generation owned by individuals, companies or communities). But a big question remains:
Who should own these generation assets for the best public and private benefit?
1. Utility Companies
Traditionally, utility-scale solar and wind projects were largely demonstration projects by utility companies to prove their ability to use alternative energy technology and appease small groups of environmentally conscious ratepayers or community members. But now as alternative energy technology is becoming very common, cost-competitive, and widely utilized, there is an important reason utility companies should NOT own these assets.
Publicly held utility companies are very often guaranteed a rate of return on capital investments, so they are truly happy to build these assets because they know they will make their money back. In Michigan, they are guaranteed a 10% return on capital investments!
Utility ownership of alternative energy resources is the worst option for energy consumers in the future. Utility companies will retain their grip on energy generation and rates will continue to go up to ensure that return for the shareholders
2. Third Parties
A second option for ownership while better does not drive much value for the public as far as clean energy goes. This scenario is where a 3rd party finances the project and then sells the energy to a utility company who then sells it to you, the ratepayer. The utility companies are not fans of this model because they are often required to pay the “avoided cost” for this energy, meaning a much higher rate than if they were to build a natural gas peaker plant instead. This form of alternative energy ownership is still good for the environment but it really only benefits the owner of the system.
3. Direct Consumer Ownership
The third option of distributed resource ownership is by far the most beneficial to the owner and community. This is known as behind-the-meter solar where the consumer directly owns the solar system. And while wind is not as common, it can also be used by consumers to generate their own power. This is the form of distributed energy generation you see on houses and businesses that have invested in their energy future. Energy generated by consumers is a direct supplement to utility energy consumption and often will take advantage of a metering incentive – where a home or business owner can receive credit for extra energy sent to the grid. This ownership type benefits the individual owner by lowering electric bills, reducing carbon footprint, and can improve resiliency by using battery backup technology.
The third option is most beneficial to the community because it is the most “distributed”, as compared to utility-scale solar and wind farms. What I am getting at is that centralized energy generation is vulnerable to catastrophic disruption; for example, what would happen if there was a targeted attack on just a few energy generating facilities today in the USA? Extreme heat and wildfires on the West Coast are already proving disruptive to centralized energy distribution. Because consumer ownership of energy generation is decentralized it improves our communities’ safety and resilience to natural disasters, attacks, and acts of God.
Solar and wind are quickly growing industries with new developments breaking ground every day. Without a doubt, these technologies will be a part of the human race’s future on Earth. No longer is it acceptable to simply support their growth, it is time to support their growth in the right sectors with the most benefit to the public and our individual pocketbooks. We can decentralize energy generation to better our world and release utility companies’ grip on our pocketbooks. Go solar today to join the movement.
Interested in going solar at your home or business?
Give us a call for a free consultation to see if solar is right for you! Call (248) 923-3456 or request a Free Online Solar Analysis for Your Home or Business.
Michigan Solar Solutions is a commercial and residential solar installer and electrical contractor that has served the lower peninsula of Michigan since 2007. We have installed thousands of panels and have a happy customer near you, check out what our customers think of us on Guild Quality.