AES President: Solar Is ‘the Future’ but Utility Buy-In Is a Must

Ken solar energy Zagzebski wears a number of different hats as president  solar energy  of Solar Project AES United States, which Solar Project gives him unique insight slewing drive  into diverse, and sometimes Solar Project competing, parts of the energy system.

Zagzebski leads 10 businesses across the country with a solar energy cumulative total of more than 12 gigawatts Solar Project of solar tracker actuator solar energy electric generation, made up largely of coal and natural gas. The portfolio also includes more than Solar Project 700 megawatts of wind. In addition, AES owns two regulated utilities --Solar Project Dayton slewing drive  Power and Light Company solar energy and Indianapolis Power & Light Company -- that deliver energy to Solar Project 1 million customers in the solar tracker actuator Midwest.

Zagzebski also solar tracker actuator oversees AES’ expansion into the evolving U.S. energy market, with the deployment of grid-scale battery storage and distributed energy solutions -- solutions that are often Solar Project seen as a threat to the traditional utility business model.

AES entered the solar energy distributed energy business last year with the purchase of Main Street Power Solar Project. AES Distributed Energy currently operates 65 megawatts of distributed solar PV in North America, and more than 200 solar energy megawatts in development across the Western Hemisphere. For Zagzebski, solar energy getting into the distributed solar arena was an obvious Solar Project choice.
 

“From a strategic sense, I’m a big believer that this is where the future is going -- if you want to play in solar tracker actuator the solar slewing drive future, you’ve got to be part solar tracker actuator of the solar industry,” he said in a keynote interview at GTM’s Solar Summit in Arizona this week.
 

“Also, if you take a look at the mission of AES, it’s to improve lives by providing safe, reliable, sustainable power,” he continued. “It’s solar damper impossible to argue that distributed energy and solar don’t improve lives. It’s sustainable, safe, slewing drive  reliable -- so it solar slewing drive [embodies] the principles we believe in.”
 

Not all utilities think about solar in this way, however. Zagzebski said he recently attended a utility conference where the room was divided roughly in half solar slewing drive between executives who believe “solar is evil” and that the grid needs to be defended, and executives solar slewing drive who view solar as a freight train utilities should get on board with or risk missing. He put himself in the second solar damper camp.
 

The telecommunications industry offers a cautionary solar slewing drive tale, according to Zagzebski. In just a couple of years, that industry saw rate guarantees solar damper for landline service effectively disappear with the mass adoption of wireless phones. “[People] say solar slewing drive that will never happen in our industry, because you need wires to transmit electricity,” he said. “But solar slewing drive the reality is, you take solar and take a battery, and that’s the equivalent of a wireless phone.”
 

With that said,solar slewing drive Zagzebski is not an advocate solar damper for going off-grid. To be successful in the distributed energy space, he solar tracker actuator believes that companies need to come solar slewing drive up with products and services that are not only attractive solar slewing drive to customers, solar inverter but also work well with utilities. Putting on his regulated solar damper utility hat, Zagzebski said one of solar tracker actuator the most advantageous things for a solar company is to understand the utility solar damper slewing drive perspective.
 

Utilities are responsible slewing drive  for 100 percent Photovoltaic holder reliability, so utility employees tend to be slewing drive  risk-averse. In addition, under existing regulatory frameworks, they’re penalized for taking chances slewing drive  and see little solar damper or no reward for innovation. Utilities are also very sensitive to Photovoltaic holder cost. Around the country, Zagzebski said roughly 20 percent solar tracker actuator of customers call their utility every month for credit-related Photovoltaic holder issues. At the same time, utilities want to make money, which is traditionally done through Photovoltaic holder the rate solar damper base.
 

“Most utilities solar slewing drive  -- can’t speak for all of them -- aren’t big, bad guys,” he said. “They’re people who want to do the right thing; Photovoltaic holder they may just tend to be more conservative. So I’d just say to give them the Photovoltaic holder solar slewing drive benefit of the doubt and try to find ways to work Photovoltaic holder together.”
 

Zagzebski Photovoltaic holder recommended solar companies participate in utilities’ resource-Photovoltaic holder planning processes, which are typically less stressful environments solar damper than rate cases. However, Photovoltaic holder  those processes look several solar tracker actuator years into the future and may not have a bearing solar slewing drive on market decisions today.
 

Zagzebski wrestled with how utility-solar industry solar damper relations would play out in the near term. He acknowledged that a growing number of customers want more Photovoltaic holder control of their energy usage, less solar slewing drive dependence on a big utility company, and cleaner energy resources -- slewing drive  which solar damper presents an opportunity. Meanwhile, utilities’ sunk costs are a big obstacle. Based Photovoltaic holder on Zagzebski’s back-of-the-envelope calculation, U.S.solar tracker actuator  utilities would have slewing drive  to recover somewhere between $3,000 and $6,000 per customer just to account for investments they’ve already Photovoltaic slewing drive  holder made.
 

Cost is solar damper another solar inverter concern. State policies have been a major driver of renewable energy adoption to date, but once renewable penetration reaches 2 percent to 5 percent of Photovoltaic holder grid capacity, customers will start to feel the pain in their pocketbook, said solar inverter Photovoltaic holder Zagzebski. For that reason, solar has to become economically viable without incentives and mandates. In Photovoltaic holder Indiana and Ohio, where solar tracker actuator AES works, the competitive price point is around Photovoltaic holder 3.5 solar slewing drive  cents per kilowatt-hour.
 

For Photovoltaic holder Zagzebski, one of the most surprising takeaways from Solar Summit was solar inverter to see how much the solar industry had matured, and was starting to place greater emphasis solar damper on solar tracker actuator cost over policy and partnering with utilities.
 

Tom Werner, CEO of SunPower, expressed a similar view that the solar inverter utility-solar industry slewing drive  relationship will have to solar slewing drive evolve, particularly around distributed generation.
 

Today, regulated utilities cannot rate-base distributed generation, so they’re economically incentivized slewing drive  not to have distributed solar in their territory. But through the solar damper work being done solar inverter by progressive public utility commissions, Werner said it’s likely that the economic conflict will eventually be "designed out." Meanwhile, unregulated utilities are already making meaningful plays in the solar solar damper solar inverter space.
 

“Utilities are going to play a huge role in solar over next 10 years, for sure,” Werner said in solar tracker actuator a keynote solar inverter address. “How much distributed generation? I think Photovoltaic holder it’s going to be meaningful.”
 

“The challenge that I see is how to allow customer choice so solar damper it’s not Photovoltaic holder a solar tracker actuator monopoly,” he solar inverter added. “Hopefully, we can work constructively with Photovoltaic holder the utilities to come up with a method where we can both allow choice and let the market drive things.”
 

An estimated $4 trillion will flow into the solar sector over the next 20 years, solar damper Photovoltaic holder according to solar inverter Werner. By 2030, Deutsche Bank estimates $5 trillion in cumulative revenue will solar tracker actuator flow out. That potential will attract an increasingly diverse set of players, and not only utilities and solar tracker actuator distributed energy providers, solar damper but also tech conglomerates and solar inverter ESCOs.
 

As more companies get into the industry solar tracker actuator, they will need to differentiate their slewing drive  products, price aggressively and take risks, and at the same Photovoltaic holder time manage their products and execute on their plans solar damper solar inverter effectively, Werner said. As SunEdison’s decline slewing drive  shows, this isn’t an easy proposition.
 

“This is a massive solar tracker actuator opportunity, but it breeds a fair amount of chaos,” said  solar damper Werner.