Benefits and costs of a utility-ownership business model for residential rooftop solar photovoltaics

Abstract

The rapid growth of rooftop solar photovoltaic systems can pose a number of financial challenges for electric utility shareholders and their customers. One potential pathway to resolving these perceived challenges involves allowing utilities to own and operate rooftop solar systems. However, the financial benefits and costs of this business model are not well understood. Here we model the financial performance of a large-scale utility-owned residential rooftop solar programme. Over a 20 yr period, the programme increases shareholder earnings by 2–5% relative to a no-solar scenario, compared to a 2% earnings loss when an equivalent amount of rooftop solar is instead owned by non-utility parties. Such a programme could therefore be attractive from the perspective of utility investors. The impacts on utility customers, however, are more mixed, with average bills of non-solar customers increasing by 1–3% compared to the no-solar scenario, similar to the 2% increase under traditional, non-utility-ownership structures. Utility ownership of rooftop solar can potentially align utility financial interests with solar photovoltaic uptake, but the economic implications are not well understood. Now, G. Barbose and A. Satchwell evaluate the potential benefits of this model for utility shareholders and customers and show viability.