A Major Shift In The Solar-Utility Relationship
Tensions between traditional electric utilities and national rooftop solar companies have escalated significantly in the US. The rhetoric has grown more harsh on both sides of the rooftop solar debate, which is not surprising given the enormous market at stake. Whereas traditional utilities do not want to lose valuable revenue from residential/commercial customers, rooftop solar companies are doing everything in their power to convince these customers to switch to solar.
The policy battles between major traditional electric utilities like Pinnacle West Capital Corporation (NYSE:PANW) subsidiary APS and SolarCity (NASDAQ:SCTY) are indicative of the conflict between the two industries. While many utilities like APS and SRP still appear to be adamantly against rooftop solar, the relationship between utilities and rooftop solar companies appear to be entering a new phase of collaboration.
Strategic Transition
Solar advocacy groups have generally employed highly aggressive tactics over the past few years with varying degrees of success. While such aggressive tactics have allowed the rooftop solar industry to triumph in many regions, such tactics also appear to be growing less effective and even counterproductive in some cases. In fact, many believe that Nevada’s decision to kill the rooftop solar industry was partly motivated by TASC’s (The Alliance for Solar Choice) highly aggressive and even controversial tactics.
SolarCity’s departure from TASC is a sign that a general shift in the industry’s mindset is underway. Given SolarCity’s clout and disproportionate influence in the rooftop solar scene, the company’s departure clearly represents a huge blow for more aggressive solar advocacy proponents. More recently, Bryan Miller was fired from TASC and Sunrun (NASDAQ:RUN) likely as a result of growing dissatisfaction surrounding his aggressive methods.
As Bryan Miller helped spearhead the highly belligerent rooftop solar campaign against electric utilities, his firing is perhaps the biggest indication that the rooftop solar industry is attempting to transition away from more aggressive tactics. Taking into consideration the recent damaging policy losses experienced by the rooftop solar industry, aggressive solar campaigning tactics are clearly starting to lose their effectiveness.
In fact, the aforementioned Nevada decision caused major rooftop solar companies like SolarCity, Sunrun, and Vivint Solar (NYSE:VSLR) to experience sharp stock declines. The unprecedented damage caused by the Nevada decision more than erased these companies’ massive gains after the solar ITC was extended. In light of the growing policy headwinds facing rooftop solar companies, a more collaborative solar advocacy position should be a major positive for these companies.
Rooftop Solar Companies Ill-Equipped for Conflict
The traditional electric utility industry has a massive amount of resources to leverage against the comparatively minuscule rooftop solar industry. While rooftop solar companies were able to secure policy victories in an overwhelming number of cases early on, this rapidly appears to be changing. Now that major electric utilities are starting to view rooftop solar as a clear existential threat to their business models, many are doing everything in their power to stunt rooftop solar’s growth.
Although rooftop solar companies largely have public approval on their side, the industry is still not equipped to deal with the massive resources of traditional electric utilities. Not only does the electric utility industry have far more financial clout than the rooftop solar industry, but it also has far more entrenched connections with commissioners and regulators. Even efforts to uncover these connections have done little to influence policy outcomes, as was clearly demonstrated in the Nevada case. Despite Sunrun’s efforts to shine a light on the Nevada governor’s administration’s ties to NV Energy, Nevada’s policy decision remained firmly anti-rooftop solar.
