The impact on residential solar companies Tesla (NASDAQ:TSLA), Vivint Solar (NYSE:VSLR), Sunrun(NASDAQ:RUN), and SunPower(NASDAQ:SPWR) shouldn’t go unnoticed. They’re winning the policy war against utilities, and as they do, it’ll open a larger and larger market across the country.
Policy wins are going to renewable energy
The election earlier this month was accompanied by a number of ballot initiatives that will impact solar energy for years to come. And for the most part, solar energy was a huge winner.
Despite utilities’ spending $26 million to pass a referendum that would have undermined solar economics in the state, Florida voters rejected the utility referendum. The state now looks like it’ll have a bright solar future.
In Nevada, less than a year after the public utility commission essentially killed the rooftop solar industry, residents overwhelmingly voted to break up Berkshire Hathaway(NYSE:BRK-B)-owned NV Energy’s long monopoly in the state. Customers have to be given energy choice, meaning more solar in one of the country’s sunniest states.
In the past, Wisconsin has tried to add fees to utility bills that would kill solar energy before it ever got started, but those attempts were rejected by the court.
There’s an important trend here for utilities and solar companies: When solar energy goes on the ballot or to the court, it wins. That should have every utility in the country frightened because that gives millions of customers choice regarding their energy needs.
The looming threat for utilities
Policy wins are important because they lay the groundwork for future innovations to take hold in energy. Today, that means rooftop solar on more than 1 million homes in the U.S. — and that number is growing quickly.
The next step will be adding energy storage to homes, something that Tesla is leading on and that Vivint, Sunrun, and SunPower are all adding, as well. As energy storage is added, customers can use more of their own energy, making net metering less important and providing more flexibility for customers.
The holy grail for renewable energy is allowing customers to cut the cord to the utility altogether. We may be a decade from that being a reality, but the more utilities add fixed fees or demand charges, the more quickly the economics of cord-cutting will become compelling. Long-duration energy-storage technologies are already beginning to be deployed, and before long, a couple of Powerwalls and a long-duration energy-storage system may be a viable option for consumers, making utilities irrelevant.
The slippery slope in energy
Utilities are in a tough position, having incentives to apply policies that protect short-term profits but which may undermine long-term competitiveness. It’s clear that when push comes to shove, voters are willing to overturn utility policies, voting for solar energy across the country. That has to be a concern for utilities, and it shows that the future is getting brighter for solar energy companies providing the solutions customers want.