Rewards, challenges and options for rate-based investments.
Paul Alvarez is a principal and utility practice leader with MetaVu Business Consulting. Benjamin Hodges is manager, treasury, with Southern California Edison.
The debate in Washington on climate change is heating up, and a national renewable energy standard is part of it. Although far from being law, proposed federal climate legislation is already impacting the business decisions being made by U.S. utilities.
Many investor-owned utilities have been operating under state-mandated renewable energy standards for some time. Many of these standards include solar or customer-sited generation mandates, and investor-owned utilities (IOUs) are acting aggressively to comply. But other than a few notable exceptions, compliance with solar and customer-sited mandates generally is being accomplished through independent customer investment and power-purchase agreements with independent power producers (IPPs), rather than regulated utility investment in renewable generation.
Investments in solar generation offer a variety of potential rewards, challenges, and options for utilities. Solar generation, and particularly customer-sited photovoltaic (PV) solar, might play an interesting and influential role in future IOU resource portfolios and business models.