Big utilities pushing into booming home solar market

Wed Oct 22, 2014 7:00am EDT
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By Nichola Groom

Oct 22 (Reuters) - For years, the utilities responsible for providing electricity to the nation have treated residential solar systems as a threat. Now, they want a piece of the action, and they are having to fight for the chance.

If utilities embrace home solar, their deep pockets and access to customers could transform what has been a fast-growing, but niche industry. Solar powers only half a million U.S. homes and businesses, according to solar market research firm GTM Research.

But utility-owned rooftop systems represent a change the solar installation companies who dominate the market don't want, and whether the two sides can compromise may determine if residential solar truly goes mainstream.

In Arizona, the state's largest utility has proposed putting solar panels on 3,000 customers' homes, promising a $30 monthly break on their power bills. In New York, regulators are weighing allowing utilities to get into the solar leasing business to meet the state's aggressive plan to incorporate more decentralized, renewable power onto the grid.

That's a change from the industry's recent skepticism of residential solar. Last year, for example, the Edison Electric Institute, a utility trade group, in a report described rooftop solar as a "disruptive challenge" that could squeeze revenue and profits as customers defected, leaving companies forced to maintain grids that serve all.

Residential solar grew 45 percent in the second quarter from the previous year and installations are expected to exceed 1 gigawatt this year, or about enough for 165,000 homes, according to GTM Research. That growth has been underpinned by government subsidies and falling equipment costs that have allowed startups to underprice utilities.

No-money-down solar leases also have made rooftop systems much more financially accessible, boosting demand.