A recently released solar map of New York City found enough room for solar panels on building rooftops to power half the city during hours of peak electricity use. And the city is not alone. Almost 60 million Americans live in areas where solar prices are competitive with retail electricity costs, and this kind of local energy generation has the potential to transform an archaic electricity system into a 21st century grid with millions of producers generating renewable electricity and dollars for local economies.
During the 20th century, the electricity system was centrally planned and controlled, with monopoly utilities delivering inexpensive electricity in return for guaranteed profits from state regulators. Americans were willing to accept the environmental consequences and centralized control of the electric grid because they were largely without economical alternatives like rooftop solar. The rapidly falling cost of renewable energy offers a dramatically different electricity future, one of widely dispersed power generation from renewable sources, and widely shared economic benefits, but only if Americans can wrest back control of their electric grid.
As it stands, antiquated state and utility rules put a grid lock on the system. Interconnection standards for wind and solar producers are much like the rules the old AT&T monopoly used to regulate which phones could connect to its network, making manufacturers customize products for each state. Renewable energy projects face complex applications and long delays, making it harder to get loans to finance projects. The Clean Coalition reports that many as 97 percent of renewable energy projects trying to get a contract and grid connection under California’s renewable energy law fail to do so, stranding millions of dollars in development costs.
The rules are little better at the federal level, where regulators oversee regional electricity grid planning. Under the 2005 Energy Policy Act, the Federal Energy Regulatory Commission (FERC) has routinely awarded bonus incentives for new transmission line development at the expense of local power generation. Although FERC has issued its Rule 890 requiring regional planning authorities to examine cost effective alternatives to new power lines, FERC chairman Jon Wellinghoff says that the Commission largely leaves the policing of this rule to the stakeholder process, one he admits is dominated by incumbent utilities and transmission line developers.
Ultimately, the utilities remain tied to a system that supports their business model, a guaranteed rate of return on new centralized power plants or transmission lines but few rewards for allowing third parties to replace dirty fossil fuel power with clean, local renewable energy.
While the barriers to progress are significant, the rewards for changing the system are enormous.
The Germans have constructed more than 10 gigawatts of rooftop solar power (enough to power 1.3 million American homes) in the past two years and plan to shutter their entire fleet of nuclear power plants. More remarkably, only 10 percent of the 45 gigawatts of renewable energy on the German grid is owned by the major utilities. Rather, the rapid expansion of wind and solar power has been driven locally, transforming hundreds of thousands of German citizens into energy producers, generating electricity and billions in local economic benefits, and creating an unbreakable constituency for the continued expansion of renewable energy.
The opportunity is similarly large in the United States.
New York City could supply 14 percent of its total electricity from rooftop solar alone, transform over 50,000 homes and businesses into energy producers, and create over 40,000 jobs. And switching to solar would save money over current electricity prices. In Washington, DC, maximizing electricity production from rooftop solar could boost the economy by $400 million to $1.5 billion and create over 14,000 jobs.
More than 30 states could generate all their electricity locally, from in-state renewable energy sources, according to the Institute for Local Self-Reliance. With wind power prices already competitive in electricity wholesale markets and with solar prices competitive at retail prices for 20 percent of America, millions of Americans could help break the utility grid lock and become energy producers, save money, and create jobs.