Rooftop Solar by Electric Utility Companies

Rooftop Solar & Grid Storage by Utilities

Solar energy is one of the most abundant forms of energy available to us. It drives almost all of the natural world, it’s emissions free, and it’s available to the vast majority of places we live a large portion of the day. So, why aren’t we using it more? Why aren’t we utilizing this free energy that is so readily available to us? Why is the US, in particular, so slow in transitioning? To me a big reason is simply how we are going about it.

Currently there are basically two options for solar power generation. Big solar farms where a large company spends millions or billions of dollars to buy or lease hundreds of acres of land, construct the solar farm, and build power transmission infrastructure to get the electricity to the nearest substation, then on to the city where it’s needed. The other option is a home or business owner taking it upon themselves to make a large investment to install solar panels on their roof to provide for their own power needs, plus maybe a battery storage system for nighttime, an investment which won’t reach a break-even point for an average 8.7 years. There are a few other options such as community/co-op arrays and such, but those are rare in comparison, and for the most part, large solar farms, and home residential solar are the two main methods.

First, let’s look at the utility solar farm option. In order to build a solar farm you have to find a large parcel of land to buy or lease. I’ve seen estimates from 5 to 10 acres for 1 MW of capacity. That means for a large 100MW solar farm you would need 500 to 1,000 acres of land. In recent years there have been lots of articles about large new solar farm installations, and the difficulties they can face in getting approvals, and opposition that they can face from area residents and governments who are opposed to them.^1,2,3,4 The company has to find the land, fight through objections of local residents or governments who may be opposed to it, and if they aren’t stopped, build the solar farm to generate electricity, construct large transmission networks to transmit the power to the nearest substation, which is then sent to a city where it’s actually needed. It’s expensive, sometimes unpopular, and because the single power generation facility and transmission lines can be single points of failure, a lone storm, tornado, earthquake, or accident could disable the whole system and leave large numbers of homes and businesses without power.⁵For example, in March 2024 a large hailstorm in Damon Texas took out thousands of solar panels of a large solar farm.

Another concern is the amount of land they take up. For the facilities built in dry regions, like the southwest US, this is normally less of a concern as there’s lots of open desert land that isn’t suitable for agriculture or most other uses without a prohibitive amount of irrigation anyway. However, when renewable energy is needed in a region that is highly productive for agriculture, then chances are a solar farm will need to be built on land that would otherwise have been used for agriculture. If it happens to be in one of the most agriculturally productive areas in the country, then in order to build a solar farm there you have to take some of the most agriculturally productive land to build it on and stop using that land for agriculture. Also, the most agriculturally productive regions are so productive because they get sufficient rainfall, which means the skies are often cloudy and overcast, which will require the solar farm to be built even larger to generate the required power. In addition, large-scale construction projects, such as installing a solar farm, always have the possibility of doing damage to the land it is built on, and to the surrounding lands in that area.⁶ If plant cover is removed and not sufficiently managed and replaced it can lead to erosion and dust blowing to neighboring areas or farms.

I’m certainly not against large solar farms, and in general I’m in favor of them, but there can be issues with them.

Now let’s look at rooftop solar arrays. Residential roofs are relatively good places for solar panels, already having sloped surfaces, a portion of which likely facing a good direction, and often free of obstructions. Additionally their location tends to be ideal because they are already located in the area that needs the energy, a city. The larger the city the more power it needs, and the more available roofs it has. The big problem with residential solar, however, is that it is currently extremely expensive, averaging between $15,000 and $30,000, and even far more once you factor in battery storage.⁷ For homeowners who aren’t sure how long they are going to live in their houses, making a 10 or 20-year investment in a solar power system is very risky. There are lease programs, but they generally seem pretty convoluted, with people often misunderstanding or being misled about the terms they are signing up for.^8,9 There is net metering to recoup some of the money by selling excess electricity to the grid, but as in California, you have to worry about whether net metering will be taken away or drastically reduced at some point in the future.¹⁰ Additionally, if a homeowner wants to sell and move will they have to convince a prospective buyer to take on the lease or the loans for the solar panels? The current setup for rooftop solar keeps many people, maybe most people, from getting solar for their home unless they just have the money to afford it outright.

Another major issue with residential solar that most people don’t think about is that, as more and more homes get solar installations they pay significantly less to the utility company for their electricity, which only makes sense, that’s why they did it. The problem comes from the fact that the electricity utility still needs to maintain their electricity generation and transmission facilities, and so their fixed costs really don’t go down even though their income does. If there is extremely cloudy weather for days or weeks, or far less sunlight throughout the winter, the utility company still needs the capacity to be able to generate enough electricity to cover everyone, even those who do have solar panels but aren’t currently generating enough electricity. The result is that the utility company has to charge more for electricity to maintain that capacity as fewer users have to support those same fixed costs. All of the power plants and the entire transmission network must be maintained as it is still needed by almost everyone, whether they always rely on it, or only occasionally need power, or just want to sell energy back to the grid.¹¹ The more people who get rooftop solar the more electricity demand and income for the utility company falls, which drives the price of electricity from the grid up because all of the facilities and infrastructure still need to be maintained, which convinces more homeowners to move to solar, which drives down the demand and income, and so on.

Once again, I’m definitely not against rooftop solar. Moving to solar is a good thing for the environment and a positive step, but on one hand it’s so expensive that it’s just too risky for most people, and on the other hand when it IS done it is unintentionally sabotaging the stability of the electrical grid that we all rely on, and will continue to rely on.

So we have two main avenues for solar energy, both of which have issues. It seems that energy companies are the ones who have the financial resources to install solar arrays, and have the bulk buying power to do so cost effectively, and yet residential homes are what have large sloped flat areas perfect for installing solar panels, and are already located in or near cities. At first glance it can seem like a Catch-22. But I kept thinking about it and wondering if there was some better way to go about this. And the question that came to my mind was, could rooftop solar on residential homes be done by energy utility companies instead of by individual homeowners? Is that possible? Is it crazy? How could it even work? Why would the utility company want to do it? And why would a homeowner want or allow it?

So, the utility company would install solar panels on sun-facing sides of the roofs of residential homes, and rather than simply installing just enough capacity to fulfill the needs of the household, the whole roof face would be filled to generate as much electricity as possible to feed into the grid. The panels would belong to the utility company, just as currently the electric meters, electric lines running to our homes, and electric utility poles that happen to be on our property all belong to the electric utility company. The homeowner would have to agree, and would need to be compensated somehow, just as the owner of a building is compensated when an advertising firm leases space to put a billboard up on the side of their building. Can all of that really work?

Well, what are the benefits for the utility company? All of the potential households for them are already customers and so the houses are already connected to the grid, so hopefully few major modifications would need to be made for connection. The electric utility company doesn’t have to buy hundreds of acres of land, fight with local residents, spend millions or billions building the solar farm, spend millions connecting it into the grid, is able to generate power inside the city that needs it, is able to build up capacity slowly and without the huge upfront investments required for constructing a large solar farm, and is able to keep their customers.

And so what are the benefits for homeowners? The homeowner gets to utilize clean renewable energy and yet doesn’t have to invest $15-30k or more on a solar power and battery system, doesn’t have to worry about convincing a potential buyer to take on that loan or lease if they decide to move, gets a credit on their electric bill, and having that built-in income can even be a selling point for potential buyers.

It seems like a pretty straightforward idea, but could it work?

To examine this idea let’s look at an example city. Columbus, Ohio is the closest big city to me so let’s go with that one.Natural gas is currently the largest source of electricity generation in Ohio with almost 59%, with coal second at around 37%, nuclear third at 12%, and wind and Solar together only making up 3.44%, with hydroelectric even further down the list.¹⁴ As far as renewable power generation goes, we have a lot of opportunities for improvement in Ohio.

In Columbus and its surrounding suburbs there are around 550,370 housing units.¹⁶ Here I’m going to have to make some very rough guesses on how much of the total roof space might be able to be used. I’ll guess that 1) half of the roofs are suitable for installing solar panels, 2) half of owners would allow the utility company to put panels on their roof, and 3) roughly one-third of the roof space would be facing the correct direction for solar. A half times a half times a third leaves only 8.5% of the total residential roof space, and yet that still comes to more than 1,780 acres of space for solar panels. That could be enough for maybe around 300MW of solar power generation, and that’s with only 8.5% of residential roof space, and without including ANY industrial or commercial buildings or other large types of structures at all. Also, because the power generation would be so spread out around the city and throughout the grid, any natural disaster such as a tornado, storm, or even earthquake would not destroy, nor likely even seriously damage, the total electricity generating capacity of the city. If this became the norm and even higher percentages of homeowners were open to it, and other larger buildings such as commercial and industrial buildings were included, the capacity could be much much greater still.

It seems to be an intriguing idea, but could it make economic sense?

Based on data for 2023 from the National Renewable Energy Laboratory (NREL.gov)¹⁸, the purchase and installation of residential solar arrays averages $2,682 per kW, well over twice what utility scale solar farms cost at $1,161 per kW, so at first glance it looks like it’s not worth it. However, if we examine the cost breakdowns we see that some of the costs simply wouldn’t apply if the electric utility company were doing residential rooftop solar for themselves, and some others would be very different. For example, around $400 per kW of the cost is simply profit, because of course the company selling and installing it is in business to make money. If the utility company were installing their own panels using their own crews, for their own power generation, there really would be little to no profit on the installation. Their profits would be from the electricity generated by the panels. Also, marketing is around $470 because companies selling solar installations need to market to acquire new customers. While the electric utility company might have to send people out to explain the program to homeowners, the people they are talking to are all already customers of the electric utility, and so the associated time and costs would be much less per kW. Just making adjustments to those 2 costs makes a big difference.

What about the costs of the hardware? Besides the solar panels themselves there are three main things, the EBOS (electrical balance of system), SBOS (structural balance of system), and inverter. These costs can’t go down to the utility price because they aren’t the same equipment on the same scale. The utility company is buying large equipment for a large solar farm. There would still be a difference, however, because while we are buying them one at a time for our home, the utility company can buy them in bulk. The EBOS averages $333, let’s say that the utility company could get it for $295. The SBOS averages $237, so let’s say that drops to $205. The inverter averages $314, and we’ll say that drops to $280. Those are fairly conservative drops, but already that is over $100 off of the hardware.

Now for the panels themselves, the average cost for residential panels is $338 per kW, and for utility it is $372. Now wait a minute, aren’t they supposed to be cheaper for the utility scale because they are buying in bulk? If they were the same kind of panels they would be, but the utility scale panels are physically larger, and often higher quality and more efficient. My guess is that, for residential solar, the utility company would use a mix of large panels where they fit, filling in with small panels around them to maximize the efficiency and the area covered, but that’s a guess and there could be technical issues that complicate it. Let’s assume they’ll be using residential panels, and I’d guess that the utility could get the residential panels for $295.

With just those adjustments the cost has gone from $2,682 down to $1735. It is still far higher than the solar farm, but also comes with a lot of benefits. It keeps the power generation in the city, valuable land is not taken up for the solar farm, the utility doesn’t have to fight local residents or governments about placing a solar farm near them, the overall electric capacity of a city is not likely to be damaged by a single storm, earthquake, or other disaster, utility companies can start this small and build up capacity gradually without the huge up-front investment of a solar farm, homeowners don’t have to spend 10 or 20 years paying for solar and battery systems nor convince a prospective buyer to take on their loans, and the homeowners who have utility company solar panels on their home aren’t likely to get their own solar array and so will stay customers of the electric utility. Of course the biggest benefit overall is that more electricity being generated by renewable sources means less burning of fossil fuels and so less greenhouse gas emissions and less pollution.

One final cost adjustment that might eventually come into play is that these prices are for quantities at current prices. If this model were to grow, and this were done in large cities all around the country, then economies of scale would kick in, the manufacturing processes would become much more streamlined, and so prices for all of the components would drop. If every major city around the world were doing this, how far could the overall prices drop? A quarter? A third? Half?

The last thing we need to look at for this idea is the compensation to the homeowner. Of course this won’t likely cover their electric bill, as they aren’t the ones paying for the equipment. My thought was that maybe the electric utility could give a $5 credit for every kW installed on the homeowner’s roof. So if a home had 10 kW of solar panels installed on it, they would get a $50 credit on their bill every month. 5 kW on the roof? Then it would be $25. It isn’t a huge amount, but the homeowner doesn’t pay anything for it, nor do they even have to do anything. I would definitely let a utility company install solar panels on my roof for $600 a year, or even $300!

Okay, so that’s the idea for rooftop solar done by utilities. If this model and large solar farms together started to make a significant impact on the energy consumption of a city like Columbus then maybe a point could be reached where, in the summertime the fossil fuel burning electricity generation plants will only be run at night, because the city’s needs will be largely met during the day by these renewable sources. But what about at night? Are we still going to need to run our fossil fuel burning power plants to have power at night? If we are eventually producing more energy during the day through solar than we need, how can we store it so we could use it at night? There are large arrays of batteries which are hugely expensive and have a limited lifespan, pumped-hyrdo storage, which only works for places with large elevation changes near them, gravity batteries which sound good but don’t seem to hold enough energy capacity to be viable… there just don’t seem to be many good options. I thought about this for quite a while, and eventually I came to a surprising conclusion. We should keep our natural gas power plants. What? Did I suddenly lose my mind? Well, maybe, but we have all these existing power plants that mostly burn natural gas to heat water into steam to spin turbines to generate electricity, but that generates greenhouse gas emissions. Do we eventually want to retire them? I had always assumed that the goal should be to retire those plants and find some completely different method of energy storage. But now, my thought is no, we shouldn’t retire them, we should transform them. Here’s the idea. When renewable energy generation eventually reaches the point of generating more electricity than is needed, the grid should send that excess electricity to the power plant. Why? Because at the plant there are already large tanks for storing gas, and large generators for burning a gas fuel to produce electricity. We take that excess electricity and we use it for electrolysis, which is splitting water into hydrogen and oxygen. Water is relatively cheap, and electrolysis is anywhere from 70-98% efficient, and the hydrogen (& maybe oxygen) can be pumped into tanks and stored. At night, or when it is cloudy, or anytime demand is higher than what’s being generated, the electrolysis stops and generators start up and begin burning the hydrogen to run their turbines, which create electricity to send back into the grid. That would give us a storage capacity and generating capacity using mainly the plants and infrastructure that we already have. We could still keep a store of natural gas, but the only time that we would need to use it is when we are out of hydrogen. Changes would need to be made to put in the electrolysis equipment, and plenty of changes to the tanks and other equipment to ensure they can work with both hydrogen and natural gas, but essentially the infrastructure can stay the same. And if you’re worried about whether burning hydrogen is harmful to the environment, burning hydrogen just combines the hydrogen with oxygen again and the only outputs are heat and water. We could even put the heat to other uses if we wanted to raise the overall efficiency a bit.

Now, some of you are questioning this, and no, burning hydrogen is definitely not the most efficient way to use it. Fuel cells can can get far higher efficiencies, but we don’t have the infrastructure built up for fuel cells right now. We might get there someday, but adapting and utilizing the infrastructure we have now will allow us to make a transition to renewable energy far sooner and far easier. Plus, while we are trying to transition towards renewable energy, having that capability to use either fuel will allow us to slowly transition over to renewables, while still keeping the capacity to generate the electricity we need, regardless of what the weather does.

Yes, there are lots and lots of things that would need to be figured out to make these ideas work, but it seems like it could be worth a closer look. It would be fairly easy and relatively inexpensive for an electric utility company to start the rooftop solar plan on a small scale, give it a try, and work out the kinks before expanding. Also, there would likely be years before renewable power generation is higher than demand, so the changes to the tanks, generators, and equipment at the power plants could be done slowly.

That’s my idea on how to make a transition to solar actually workable in a reasonable amount of time, and how it can make a difference for a lot more people, and for the environment, than it does now. This is also an idea on how to let electric utility companies switch to being major drivers of a better future based on renewable energy, helping us all toward sustainability as they help themselves to adapt and grow in a rapidly changing world.

Thanks for listening, leave a comment and let me know what you think, and what your ideas are for a transition to renewable energy?

by Eric Sparks, 2024