There are simple reasons the utilities don’t like roof-top solar: Lost dollars

The electric utilities in Kentucky have for years provided Industrial customers with the sixth lowest energy costs in the country. For more than a decade, industrial customers were the largest energy users at about half of total energy retail sales in Kentucky. But in 2012 to 2017, power sales to Industrial customers plummeted from around 44,000 gigawatt hours to around 28,000 gigawatt hours, a 36% decline.

In this five-year period the electric utilities lost $738 million in total revenue. The Rural Electric Cooperatives alone lost $167 million. The power sector was left with another gap, an under-utilized coal powered generating capacity with a shrinking demand future.

What has that to do with roof-top solar?

It’s straightforward: While the Bevin administration blindly focused on coal, the utilities’ largest customer, the industry had to find their demand for renewable energy resources elsewhere and they did.

Naturally, the utilities are desperate. They need customers to buy power from them, not to generate. They don’t want roof-top solar generation.

The situation is of great concern for all ratepayers who might see higher rates in future because the unprecedented 36% drop in power sales to industrial users representing around 16,000 gigawatt hours means that the coal power plants’ capacity isn’t fully utilized. This may cause the wholesale price to go up over the coming years.

The utilities intangible value or “other good-will” are part of the revenue requirement formula the public service commission uses to regulate the utilities. The intangible value may go down. Stockholders of Investor-owned utilities are being denied the very profitable performance of companies like NextEra energy, Terraform Power and other power companies, that focus on renewable energy.

The utilities still need investors. But investors are looking for more profitable investment opportunities in companies expanding significantly in renewable energy, not coal. The utility- scale solar farms in Kentucky are still of insignificant size. Mostly it’s for look and paid for by ratepayers. The limited initiative doesn’t count in the eyes of investors.

The utilities have over the same period claimed that roof-top solar and net-metering causes a cost shift to other ratepayers. That’s a false claim:

According to the U.S. Energy Information Administration: “Kentucky has both utility-scale (1 megawatt or larger) and distributed (customer-sited, small-scale) solar power generation facilities, which together accounted for 0.1% of the state’s electricity generation in 2018”.

Other government data estimates rooftop solar in Kentucky is presently around half of the above total solar generation, or around 0.05%.

Even with net-metering in place, it’s estimated to take at least 10 years for roof-top solar in Kentucky to go from presently 0.05% to 1% of electricity sales.

It seems pointless that utilities spent huge sums of ratepayers’ funds lobbying the legislature about a roof-top solar issue that didn’t exist.

In 2018, for the first time in decades, the utilities lowered the energy price for all sectors as an attempt to encourage higher energy use.

The average residential customer price was lowered from 10.85 cents/kWh to 10.60 cents/kWh. For years, the residential energy use had gone down, but in 2018 residential energy use went up by around 3,000 gigawatt hours.

The average prices to both commercial and industrial customers were also lowered slightly, but with little effect on energy sales.

Residential customers have now become the cash cow. Revenue from Industrial customers will remain low. Transitioning into the renewable energy market, to attract investors and to remain competitive is a must. Investor-owned utilities going carbon neutral by 2050 is a small signal in this direction. But actions are needed sooner.

Roof-top solar here, like in a growing number of states is a valuable part of this transition, and regarded as a contributor not a competitor. If electric utilities in Kentucky fail this transition, ratepayers will pay the price.

Kris O’Daniel of Springfield is a scientist and native of Denmark who raises beef cattle and trains horses. Reach her at krisodaniel@ncsmail.net.