Utilities Unprepared For Major Industry Shift
The US electric utility industry is waging an increasingly futile war against the rooftop solar industry. Despite all the efforts of major electric utilities across the nation, these utilities are still having enormous difficulty stemming the growth of distributed solar. The proliferation of large residential solar players like SolarCity (NASDAQ:SCTY), Vivint Solar (NYSE:VSLR) and Sunrun (NASDAQ:RUN) has put electric utilities on the defensive in recent years. While these rooftop solar companies have experienced a slowdown in recent quarters, regional installers have experienced a surge.
Even Tesla (NASDAQ:TSLA) has seriously invested in the rooftop solar industry mainly through collaborations with SolarCity. The corporate and consumer world is clearly starting to accept and even embrace the idea of rooftop solar. Moreover, energy policy appears to be increasingly favorable towards the solar industry. This means that major utilities like Public Service Enterprise Group (NYSE:PEG) and Edison international (NYSE:EIX) will likely have an extremely tough road ahead of them.
Shifting Sentiments
The rooftop solar industry appeared to be in major trouble on the policy front. After years of policy wins, major rooftop solar companies experienced a series of devastating policy rulings. In fact, some of the largest utilities like SRP and Berkshire Hathaway’s (NYSE:BRK.A) (NYSE:BRK.B) NV Energy all but killed the rooftop solar industry in states such as Arizona and Nevada. However, the momentum on the policy front is shifting back towards the rooftop solar industry’s favor. In fact, the rooftop solar industry recently won some major and potentially game changing policy decisions.
Nevada voters recently passed a measure to break up NV Energy’s monopoly in order to allow for more competition. Given that this vote occurred right after NV Energy killed its state’s rooftop solar industry, it is safe to assume that consumers largely support rooftop solar and energy choice. In Florida, voters rejected a ballot measure that would have arguably made rooftop solar far more expensive. Despite the fact that Florida utilities spent millions upon millions of dollars trying to push the ballot measure through, voters still decided to side with solar.
Such monumental policy wins for rooftop solar companies clearly show that the tide is turning towards rooftop solar’s favor. Whereas rooftop solar appeared to be on the path towards decline a year ago, the industry is now healthier than ever. In sharp contrast, the electric utility industry appears to be headed for a downward spiral. While electric utilities still have the vast majority of market share, the pace at which these companies are losing market share to rooftop solar will likely accelerate moving forward.
