Like Night And Day: How Utilities In California And Georgia Approach Solar As homeowners embrace solar, utilities are making less money, and that's shaking up their business model. Companies in California and Georgia are handling the growth in dramatically different ways.

Like Night And Day: How Two States' Utilities Approach Solar

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STEVE INSKEEP, HOST:

2015 was a record year for rooftop solar power sales. That means more homeowners are making their own power. It also means electric utilities are making less money. Solar has become extensive enough that some utilities see a threat to their business models. Today we have reports on how utilities in two states are handling this. Lauren Sommer from member station KQED starts in California.

LAUREN SOMMER, BYLINE: There's a certain kind of Californian who's making electric utilities very nervous.

MATT BROWN: That's the pasta.

DAVIS: That's the pasta.

BROWN: That's right.

SOMMER: That's Matt Brown, and he's getting dinner for his two young boys.

ANGELO: Daddy, can I have a little more?

BROWN: Yes, you can, but...

SOMMER: Brown recently got solar panels on his Oakland home, but it's dark out right now. His panels aren't working, so Brown's appliances are running on electricity he's buying from his utility, Pacific Gas & Electric.

So even with solar panels, you might think his utility bill is pretty high.

BROWN: Right now, we're projected basically to have a zero bill.

SOMMER: Zero dollars - that's because during the day, when Brown's panels are cranking out electricity, he sells the extra back to PG&E. The power he sells cancels out the power he buys. That's what makes solar so financially attractive - at least for him.

AARON JOHNSON: It is going to be a challenge for the utility.

SOMMER: That's Aaron Johnson, a vice president at PG&E. The utility is home to a quarter of all the rooftop solar systems in the country, and a new one comes online every seven minutes. And to that, he says, today's electric grid needs an upgrade.

JOHNSON: As we begin to build that sort of modern, 21st century grid, you know, everyone's going to have to contribute to that. And we think solar customers need to contribute that.

SOMMER: Did you catch that last part? He's saying with their low bills, solar customers aren't pitching in enough. That's creating a shortfall that PG&E says will reach almost $3 billion a year within a decade. So California's utilities want to pay new solar customers less for their extra electricity and to add new monthly fees.

WALKER WRIGHT: That argument can only come from a monopoly that is used to selling every electron to every customer for the past 100 years

SOMMER: Walker Wright works at Sunrun, one of the largest solar companies in the country.

WRIGHT: What rooftop solar represents is the first true form of competition

SOMMER: Wright sees the proposed fees as a direct attack on the solar industry. The same thing happened in Arizona, where a utility recently started charging their solar customers $50 a month.

WRIGHT: We saw a 95 percent drop in the applications for solar. We saw, you know, absolute devastation in the market, and it's created a lot of anxiety.

SOMMER: That's not something California wants to do, Wright argues, when the state has big renewable energy goals. Whatever California regulators decide, the state makes up more than 40 percent of the country's solar market, so the precedent set here could spread nationwide, says Brian Chin. He analyzes utilities for Merrill Lynch.

BRIAN CHIN: A lot of times, these states all kind of look at each other and go, well, if they can do that and it's reasonable, then we can do it too.

SOMMER: Chin says it just shows how solar is disrupting the way electric utilities do business.

CHIN: You look at sort of the business model, and you can't help but go the business model has to change in the next 15 years in some way, shape or form.

SOMMER: That's why utilities in some other states are trying a different approach to solar.

MOLLY SAMUEL, BYLINE: ...Like in Georgia. I'm Molly Samuel from member station WABE in Atlanta. And here, Georgia Power, which is the biggest utility in the state, is getting into the rooftop solar game itself. The company will evaluate your house to see if you're a good candidate for solar panels, and it'll even get them installed for you.

JACOB HAWKINS: In case our customers do want to add rooftop solar, we want to be there to sell it to them.

SAMUEL: Jacob Hawkins is a spokesman with Georgia Power. It just launched the rooftop part of its business about six months ago. But in general, unlike some other utilities, Georgia Power isn't acting like rooftop solar panels are threat.

HAWKINS: We look at it, not as necessarily something brand new, but an evolution of something that we've always done.

SAMUEL: Now, there are a few important differences between Georgia and California when it comes to solar. Electricity costs less here, so it makes less financial sense for people to get rooftop solar panels. When they do have solar panels on their roofs, the utility doesn't pay as much to buy the extra energy generated, as it would in California.

But solar is growing here.

JASON ROOKS: I believe Georgia Power has made great strides.

SAMUEL: Jason Rooks is a lobbyist in Georgia for the Solar Energy Industries Association. He says just a few years ago...

ROOKS: I remember down at the capital hearing that, you know, solar won't work in Georgia because it's too cloudy. It's, you know - too much humidity in Georgia, and then of course it was too expensive.

SAMUEL: He says that mood started to shifts, thanks in part to the Georgia Public Service Commission, which regulates utilities. Tim Echols is one of the commissioners.

TIM ECHOLS: When I ran for office, I promised to try solar myself.

SAMUEL: He says that taught him a few things.

ECHOLS: With the first lesson being don't put solar on a house in the shade.

SAMUEL: Echols says the commission brought Georgia Power to the table, and then directed the company to add more solar power, but especially with solar farms. But Echols wasn't in any rush to do that.

ECHOLS: Our commission is all Republican, and we wanted to make sure this would work financially.

SAMUEL: That all means the state's been slow to adopt solar, especially rooftop solar. Lobbyist Jason Rooks says that's not necessarily been a bad thing.

ROOKS: In hindsight, there's a benefit to that, even as a solar advocate, that we haven't had the trial and error of early adoption.

SAMUEL: Solar is still pretty tiny here. It accounts for about 1 percent of all the energy generated in the state. And rooftop solar panels, instead of large solar farms, are only a tiny percentage of that. But there's a lot of potential. And with the utility here embracing rooftop solar, they may be forging a different path than states like California.

For NPR News, I'm Molly Samuel in Atlanta.

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