Not long ago many regarded the growing adoption of renewable as a major threat to the utility sector, as the popularity of rooftop solar-power installations led to customer attrition and higher costs.
The rollout of solar power has exceeded expectations dramatically, thanks to significantly lower costs. Much of this progress stems from China scaling up its production capacity for modules and other components and flooding the global market with supply.
But utilities, not households, have driven adoption of solar power. NextEra Energy affiliate FPL Group has emerged as the biggest clean-energy producer in the US, while the likes of AES, Dominion Resources (NYSE: D), Duke Energy Corp (NYSE: DUK), Sempra Energy (NYSE: SRE) and Southern Company (NYSE: SO) seemingly announce a new project or acquisition every month.
These investments have even filtered into utilities’ regulated service territories, a notable departure from recent years when management teams pursued renewable energy outside of their home markets to avoid taking share from their existing baseload capacity.
What prompted this change?