Electric utilities and solar energy: The service contract in a new social context

Proposals have been advanced by both advocates and skeptics of solar energy suggesting a close merger between electric utilities and decentralized solar. It is found that there is a need for appropriate rate design by utilities to accommodate solar users, but argues that any closer merger of the two technologies is unwise. There is no compelling need for a single institution to assume the responsibility for the delivery of both forms of energy. An examination of the history and development of the electric utility industry shows: the legal and regulatory environment to be too restrictive; the organizational and managerial skill of the utilities to have developed to manage a few large projects, not thousands of small ones; that solar might not be treated objectively in utility planning of electrical grids integrated with decentralized solar; innovation, social diversity, and new organizational forms for delivering energy could be squeezed out; and that the electric utilities are having problems accommodating centrally generated electricity to new economic realities even without the additional burden of developing solar systems. Solar energy may therefore be better wedded to different kinds of institutions.