Utilities Can Lead the Way

Utilities Can Lead the Way

America's 3,000 or so public and privately owned electricity suppliers are uniquely positioned to build out solar farms, as part of a broad, public push for energy diversification.

Independent power producers, or IPPs, are also well positioned to exploit solar PV opportunities, but utilities enjoy three crucial advantages for scaling up solar:

1. Utilities control the electricity network.

When demand spikes, utilities supplement output from base-load generators with "dispatchable" power from so-called “peaker plants.” Replacing a big chunk of this flex load with renewable energy requires a level of technical expertise and coordination that only utilities possess. Owning solar PV assets gives utilities the necessary control and dexterity to integrate industrial-scale solar power onto the grid.

2. Utilities have abundant land for intensive solar farm siting.

Photovoltaics, compared to other solar technologies such as concentrated-solar or solar-thermal systems, can be sited almost anywhere, averting the need to extend transmission lines into the desert or other isolated locales.

Utilities already control large swaths of land, parking lots and open space, alongside existing substations, power plants and transmission corridors. Such acreage is ideal for solar farming, convenient to customers and the existing grid.

3. And, utilities can fund long-term investments with stable ratepayer revenue.

Solar PV requires up-front capital expenditures, which pay back over decades in fuel-free electricity. By "rate-basing" the necessary capital investments — that is, by winning regulatory approval to pass through up-front costs in electricity rates —utilities enjoy a unique recourse to reliable, long-term financing.

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