Some utilities are thinking small when it comes to solar power.
Utility Arizona Public Service on Monday submitted a proposal to install and own solar power systems on customers' rooftops in Flagstaff. Customers will pay today's electricity and hot water heating rates for the energy those systems produce over a 20-year period.
Duke Energy last Thursday gained approval for a $50 million project in North Carolina with a similar model. The utility will install and own solar electric panels at 100 to 400 locations and pay a rental fee to property owners.
By owning the systems and the power produced, the utilities can treat the distributed solar resources as a power plant that they can control.
The electricity production of solar panels tends to coincide with peak times of electricity demand. Instead of building a new power plant, or turning on costly and polluting auxiliary plants, utilities can partially meet peak load with the distributed solar systems.
Customers, meanwhile, can get solar energy systems without having to pay the large upfront cost, something that a number of solar start-ups are also doing with varied financing options.
"The project eliminates upfront costs of more than $10,000 to each customer, which we know from our experience has been a major deterrent to distributed solar systems here and elsewhere," Arizona Public Service CEO Don Brandt said in a statement. "We want to make solar energy affordable to everyone."
The $14.7 million pilot, called Community Power Project, is expected to generate 1.5 megawatts from 200 to 300 participants in Flagstaff. The plan also calls for about 50 solar hot water systems to be installed.
The electricity from the panels will be fed directly into the grid and be part of the utility's smart-grid technology program to efficiently manage the flow of energy across the grid. Arizona Public Service already has a few utility-scale solar power plants in the state, but distributed solar power could help the utility meet state mandates for renewable energy production, it said.
The solar panels from Duke's program, which had been scaled back from the initial $100 million proposal, are expected to collectively generate enough electricity to supply 1,300 homes. In a statement, Duke CEO James Rogers said that it's part of the utility's long-term strategy to diversity its power generation.
"We believe the future is a low-carbon world. The 21st century mission of our company is to decarbonize our energy supply and provide universal access to energy efficiency," Rogers told shareholders in a meeting last week.