Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



SolarCity's New Trillion Dollar Enemy

Source: SolarCity Corporation 

Rooftop solar companies like SolarCity Corporation (NASDAQ: SCTY  ) did well in 2013 -- too well. Massive utilities have the spooks, and they're pushing regulators to put the brakes on backyard power generation. Here's what you need to know.

Raising the roof
While solar currently supplies less than 1% of U.S. electricity generation, rooftop solar systems are soaring in popularity: 90,000 businesses and homeowners installed rooftop solar panel kits in 2012, 46% more than the previous year.

In an interview with GreenTech Media, Federal Energy Regulatory (FERC) Chairman Jon Wellinghoff predicted solar is "going to overtake everything ... it could double every two years."

A quick glance at SolarCity's latest numbers confirms Wellinghoff's thoughts about the industry. SolarCity doubled its megawatts deployed for Q3 2013 compared to Q3 2012, with residential systems up 150%. And estimates for 2014 growth have SolarCity set for its strongest growth yet.

Source: SolarCity Corporation 

Utilities fight back
Utilities are intimidated, if not scared, by SolarCity's recent success. These century-old stalwarts are seeing their sector shaken up like nothing ever before -- much the same as traditional telecoms reeled to adopt to mobile-phone services. Collectively, with over a trillion dollar market capitalization, utilities may seem unstoppable, but who would've thought U.S. landline use would drop more than 25% in 15 years?

With strong regulatory relationships, several utilities have taken the offensive against solar companies. Yale's environment360 publication reports that Pinnacle West's (NYSE: PNW  ) Arizona Public Service Utility and Xcel Energy (NYSE: XEL  ) have both requested states to cut back on customer incentives to install solar -- or even to levy charges against rooftop solar users. Based in Arizona and Colorado, respectively, Pinnacle West and Xcel Energy assert that rooftop solar users get all the benefit of hooking up to a reliable electricity grid without paying their fair share of upkeep costs.

The argument is complicated, and not all utilities are waging war. Power companies can gain state-mandated renewable energy credits from buying solar back from customers, and decentralized grids reduce system stress and diversify risk. Dominion Resources (NYSE: D  ) is leasing roof space from Virginia businesses to research its potential benefits. Last month, Dominion Resources announced it will spend $2 million to install 2,000 panels on the rooftop of a local Canon facility.

Source: Dominion Resources Canon Rooftop Solar Conceptual Drawing 

As if things weren't complicated enough, Duke Energy Corporation (NYSE: DUK  ) is taking both sides. It's asked North Carolina regulators to introduce new charges for solar customers, but also invested in Clean Power Finance, a California start-up funding rooftop solar development. The company also acquired its own 4.5 MW urban solar farm in San Francisco last August, tripling the city's solar generating capacity.

Is SolarCity screwed?
Solar is here to stay. Residential systems are rolling out faster than ever, and utility-grade solar facilities are predicted to be cost-competitive with natural gas by 2025. SolarCity and other rooftop solar installers will hit a fair number of snags along the way, but worries over grid upkeep will not kill solar power's potential.

While some utilities are pushing back, the smartest ones are finding ways to work with (and profit from) decentralized systems with thousands of power producers. Keep progressive picks in your own energy portfolio, and you'll be set to pull long-term profit.

Energy innovators

SolarCity is shaking up the energy sector-and it's not the only one. The Motley Fool is offering a comprehensive look at three energy companies set to soar as the energy industry undergoes historical change. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 


Read/Post Comments (1) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2793129, ~/Articles/ArticleHandler.aspx, 9/2/2015 8:56:05 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Justin Loiseau

Energy and Macroeconomic Specialist keeping investors up to date with macro news, utilities, and good companies doing good things.

Today's Market

updated 11 hours ago Sponsored by:
DOW 16,058.35 -469.68 0.00%
S&P 500 1,913.85 -58.33 0.00%
NASD 4,636.11 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/1/2015 4:02 PM
CAJ $29.63 Down -0.85 +0.00%
Canon, Inc. (ADR) CAPS Rating: ***
D $67.80 Down -1.95 +0.00%
Dominion Resources CAPS Rating: ****
DUK $69.05 Down -1.86 +0.00%
Duke Energy Corp CAPS Rating: ****
PNW $58.01 Down -1.52 +0.00%
Pinnacle West Capi… CAPS Rating: *****
SCTY $46.16 Down -2.12 +0.00%
SolarCity CAPS Rating: ****
XEL $32.98 Down -0.75 +0.00%
Xcel Energy, Inc. CAPS Rating: ***