Distributed Solar Generation
As the cost of production for thin film solar panels has decreased, the possibility of distributed generation is coming closer to reality. Distributed generation has the possibility to empower urban centers without renewable resources to generate power. As a recent article about rooftop solar generation describes (http://seekingalpha.com/article/175616-rooftop-solar-generation-ready-for-prime-time?source=yahoo), distributed generation may have far reaching effects for not only the point of energy production but also on the energy transmission regarding the development of power lines to access renewable energy resources such as wind farms and solar plants. The transmission line question is a direct result of California’s goal of obtaining a third of electricity from renewable sources to connect the renewable assets to the coastal urban centers.
Residential projects around the country are attempting to utilize distributed generation, and companies exist to deliver such at-home generation such as Solar City (www.solarcity.com). In terms of residential installations, vendors speak in terms of money saved in their electricity bills. This still leaves questions open for the homeowner. What will happen to the property value of the home? Will the solar generation be viewed as an asset or an eye sore similar to interpretations of wind farms? These questions come down to the value of total cost of ownership. When all the maintenance, smart meters, etc., are included for a home for distributed generation, will the individual consumer embrace distributed generation as the US government supports the solar industry with incentives?
On the other end of spectrum, utilities will be expected to support the green initiative of distributed generation when they do not necessarily have an incentive do so because of the impact on revenue. If the distributed generation were to take off, does it mean that utilities could take base power generators such as coal plants offline? With the variability in renewable power production, the utilities may not be able to efficiently scale back fossil fuel generation because of its reliability. A utility has an obligation to provide its customers with reliable power all the time. This would mean that a utility is buying power from customers and then also paying to supply power in a more traditional method of fossil fuels. Uncertainty also exists in the projected revenue of the utility from the reduced revenue from distributed generators.
With the uncertainty around the business model, distributed solar generation may not be primed for prime time. The utilities will need to sort out how they can capture revenue to fond operations. For homeowners, will solar panels be an investment that will improve property value and truly prove beneficial in the long run? Without government mandates, will consumers drive the demand for sustainable energy?