Report: US generators face $2B in lost revenues from rooftop solar

Dive Brief:

Growth in rooftop solar could lead to up to $2 billion in lost revenues for power producers in the eastern U.S., according to a report from ICF International.
With more than 1 million homes slated to have solar panels by the end of April, Bloomberg reports that grid operators in the eastern U.S. plan to slash the amount of conventional generation they purchase by roughly 1,400 MW beginning in 2019.
Power producers are already wrestling with falling demand, dropping market prices and increased costs to comply with environmental regulations, ICF noted, and NRG Energy warned increased residential solar could curtail investment in conventional generation and potentially threaten reliability.

Dive Insight:

Electrical sales have fallen 1.1% in 2015, the fifth time in eight years, according to a recent report from the U.S. Energy Information Administration. Now it appears those sales could potentially take another hit from the proliferation of distributed generation.

Of the $2 billion in losses in 2019, generators stand to lose as much as $716 million in the ISO New England auction, which has already reduced its demand forecast for conventional generation by 390 MW, according to ICF. In addition, ICF notes conventional generators will see a $754 million loss in the PJM auction and $523 million loss in the ISO New York auction.

The changes in power generation investments are being observed in Germany, where EON and RWE are shuttering existing conventional generation facilities and terminating plans for new plants. The German government’s "Energiewende" transition propelled these changes, where the country now gets a third of its electricity from renewables, and wholesale market electricity prices are at their lowest levels in over a decade.

Power producers will face sunk cost challenges as renewables penetrations grow, but no significant reliability problems have been reported in Germany or by U.S. system operators, with some reporting that they have obtained increased amounts of power from renewables.