Fossil Fuel-based power companies are in trouble. Residential solar power is eating away at their bottom line and its a trend that stands to threaten the very core of their business. If they can’t change something, they stand to see their profits eviscerated. So what are they doing? Fighting solar companies with legislation, trying to remove the subsidies and tax incentives that encourage people to move to a sustainable alternative.
It really is a growing problem for these companies, but at the heart of it is a failure to innovate the technology before a competitor entered the market. Programs like “net metering” allow homes that generate solar power to sell any excess energy they produce to the power company. The power companies argue that when these policies work in conjunction with the 30% federal tax incentive that expires in 2016, there are too many cards stacked against them.
Some studies have shown that if residential solar is able to capture 10% of some markets, utility companies in those markets could see their revenues fall between 8% and 41%. This problem does not similarly exist for companies that have their own solar power programs.
Instead of competing with the product, some utilities are arguing that legislation should permit them to levy some fee on solar owners, whether that is called a maintenance fee or a connection fee or some name to put on the solar owner’s bill, and allowing the utility to purchase the excess electricity at less than the retail price.
Fossil fuel (traditional) power companies are finding partners in their battle against solar in groups like the Koch-backed American Legislative Exchange Council (ALEC) which has drafted model legislation to fight against the practice of net metering.
Innovation comes at a cost. Often, that cost is the sacrificing or letting go of ideas that have seen their time. That’s not a threat to the traditional power companies as much as it is encouragement to continue to innovate. When that fails, it’s inevitable that a new face will show up in the market to fill the void. Plus, if you find that you’re allied with ALEC, it may be time to reconsider which side of history you’re backing.