Solar Electricity - SEPA Releases In-depth Examination of Utility Solar Business Models

Washington, DC (Vocus) October 8, 2010

The Solar Electric Power Association (SEPA) today released the second phase of its Utility Solar Business Models (USBM) report, entitled “Utility Solar Business Models: Developing Value in Solar Markets.” The report provides a uniquely detailed look at the business models of 21 utilities that have integrated solar energy into their energy portfolios. SEPA has been working with electric utilities on USBM development and understanding since 2007 through working groups, reports, workshops, presentations and case summaries.

“This report contains a wealth of information about how utilities can create value through solar energy,” said David Rubin, Chairman of SEPA’s Board of Directors and Director of Service Analysis for Pacific Gas and Electric Company. “Any utility leader interested in learning how they could make solar work in a financially sound way will find no better primer than this study. SEPA’s done the homework for them.”

Specifically, the USBM report examines variants among utility business models, including:

Pursuing both utility ownership and power-purchase agreements (PPAs)
Standardizing bidding and PPAs, to minimize transaction costs and regulatory review
Aggregating, integrating and controlling systems to reduce host and developer costs
Integrating distributed solar with local smart grid initiatives
Compensating host customers with lease payments or long-term fixed energy rates
Targeting underutilized properties, multiple site owners, and public rights of way
Targeting local capacity constraints using tracking systems

Overall, the report concludes that new, expanding definitions of utility solar business models represent a significant potential for solar market growth. The lessons learned from the models developed by utilities as diverse as Tucson Electric Power (Arizona), Sacramento Municipal Utility District (California), and Florida Power and Light can be applied to utilities across the country looking to develop solar power.

“There’s no doubt that solar has great potential for growth,” said SEPA President and CEO, Julia Hamm. “Just in the last two years, utilities have announced almost 800 megawatts in solar projects, worth more than $2.5 billion. What this report gives us is an understanding of how they did it, not just how much they’re doing.”

SEPA’s study also identifies four challenge areas that may influence the growth of utility-scale solar as the market matures. Those four areas are:

Solar ownership: Who owns the solar assets?
Solar value: How can the utility add value in solar markets that others can’t?
Competitive Issues: What challenges can utility solar programs expect to face from stakeholders?
Stakeholder Impacts: Who benefits and who pays for utility solar activities, and how significant are these impacts?

The Utility Solar Business Models Report also includes a solar decision making tool for utilities which highlights important business, legal, and regulatory drivers for those considering expanding beyond conventional utility operations into various forms of solar generation.

While the full report is available free of charge to SEPA members, non-members can access an Executive Summary at no charge and/or purchase a copy of the report with the decision making tool for the price of $4,999 on SEPA’s website at http://www.solarelectricpower.org/resources/reports.aspx .

SEPA will also host a webinar to discuss the report on Wednesday, October 20 at 2 p.m. Eastern, 11 a.m. Pacific. The one-hour webinar will be led by John Nimmons, John Nimmons and Associates, Inc. To register for the webinar, visit http://www.solarelectricpower.org/events/webinars.aspx . Registration to this and all SEPA webinars is free for SEPA members and $125 for non-members.

ABOUT SEPA
The Solar Electric Power Association (SEPA) is an educational non-profit organization dedicated to helping utilities integrate solar power into their energy portfolios. With more than 700 utility and solar industry members, SEPA provides unbiased utility solar market intelligence, up-to-date information about technologies and business models, and peer-to-peer interaction. From hosting national events to one-on-one counseling, SEPA helps utilities make smart solar decisions. For more information, visit http://www.solarelectricpower.org .

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