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Southern Sees the Light

How conventional utilities may drive the solar energy transition

When most people think of Georgia and energy, they think of Southern Company and coal. Well, all that’s changing now that the state is about to embrace a new law on July 1 to allow utilities to sell rooftop solar energy.

The broader question is just how the distributed energy business will play out – whether the old-fashioned utility companies will be the major players or whether the young and nimble will dominate it, or some combination thereof. In the final analysis, if the customers want the product and the regulatory provisions allow for a fair playing field, potential suitors will be attracted. And who will they be?

“Utilities want to be involved,” says Jessica Harrison, head of energy strategy for DNV GL, in a phone interview with this reporter to discuss the firm’s 2015 Utility of the Future Pulse Survey Report . "They are finding ways to get involved.”

“But customers will drive the transition,” she adds. “If it is not easy for them, they won’t do it. Regulators will play a key role in how easy and how cost-effective” the evolution ultimately becomes. To that end, she says that public utility commissions must ensure open access to the electric grid. That not only permits utilities to provide such services but also the unconventional participants that want a crack at distributed energy resources, which generate energy onsite.  

As for Southern Company, it is buying – through its subsidiary Georgia Power – 900 megawatts of utility-scale solar energy through power purchase agreements, all at competitive prices. But the new law to take effect in July will permit the parent to get into the residential solar business too – to sell, service, and perhaps the finance the panels and their installation.

Chief Executive Tom Fanning has said that he feels that utility-scale solar offers a  more cost-effective proposition, but that he has no intention of losing out on any residential business opportunities. The former will generate electricity from remote locations and transmit the electrons through the centralized transmission grid, whereas the latter provides power using onsite rooftop solar panels.

With that, WGL Holdings and Southern Co. are now testing a battery storage system at a 1-megawatt solar photovoltaic array in Georgia. If it works, the batteries will harness the electrons from nearly 3400 solar panels and then integrate that power onto the grid when the sun is not shining.

Georgia Power will purchase the output from WGL’s utility unit Washington Gas, to the tune of 1.5 million kilowatt hours a year. The Electric Power Research Institute is helping to test the lithium-ion battery system. Those systems are able to store and then discharge electricity at any time, but with a limited discharge duration of around 30 minutes to 1 hour.

In 2014, solar power counted for about a third of all new power generation that was installed – a business that is now fair game for private-sector competitors.

In fact, key research is showing that revenues for traditional utilities over the next 10 years may fall by as much as 15 percent,