Southern Co. goes all in on solar, storage, smart homes 

Source: Kristi E. Swartz, E&E reporter • Posted: Friday, May 29, 2015

PINE MOUNTAIN, Ga. — Southern Co. Chief Executive Officer Tom Fanning made it clear at the company’s annual meeting yesterday that Georgia Power customers will soon be able to go directly to the utility and get solar panels to put on their roof.

“Starting July 1, we will now offer distributed generation rooftop solar in Georgia,” Fanning said.

Fanning is making good on his word that Atlanta-based Southern is trying to find strategies for customers and tap the rising demand for distributed forms of generation, like solar. His remarks also coincide with the date for a new state law that lets Georgians enter into long-term financing arrangements with independent solar power providers.

The law props open the door for a competitive solar market. For Georgia Power, it marks an opportunity for the dominant utility to get into the rooftop solar business.

Fanning told EnergyWire the utility is still working through the details on how the operation will be commercially structured. That includes issues such as who will finance the panel system and whether the customer will own the panels or lease them, he said.

“But you can call Georgia Power, and Georgia Power will arrange to get a solar panel on your roof,” Fanning said in an interview after the meeting. “We’ll get one up there.”

Georgia’s new solar law makes the state the first in the region to have such a wide range of financing options for solar panels, according to those involved in the months of negotiations.

For a large, regulated electric company like Georgia Power, the decision to get into the rooftop solar market is a significant one. Distributed solar generation conflicts directly with the typical utility model of building large, centralized power plants and recouping that money — plus a profit — from that investment.

Moving into the rooftop solar business in some ways marks a break from that arcane business model and into a new line of business. It also is a new way Georgia Power can keep its customers hooked as the entire electrical system continues to transform in a way that lets consumers be more in control of how much energy they use.

The announcement of Georgia Power’s entrance to the residential solar market is one more sign of utilities’ growing embrace of solar power and other distributed energy resources occurring across the country, said Julia Hamm, president and CEO of the Solar Electric Power Association. Solar is now viewed as a real growth area for many utilities, and they are moving ahead with new policies and business models, she added.

Teaming up with Tesla, Nest

According to multiple sources, there has been growing anticipation around Georgia Power’s plans for entering the rooftop solar market once the law takes effect July 1. It was not the only news Fanning revealed yesterday, however.

Georgia Power also is prepared to offer roughly 10,000 adaptive thermostats from Nest Labs, the company spearheading the creation of the smart home. Fanning said Georgia Power is giving away the thermostats in exchange for those customers to agree to adopt time-of-use rates.

Such rates vary during peak and off-peak periods of energy use throughout the day.

Those rates will optimize the value of the adaptive thermostat, he said.

Georgia Power’s program is the largest deployment of Nest thermostats from a regulated utility, but Fanning said Southern is “looking to take it higher and broader.” He eventually thinks the technology can be used like an Internet server that would manage all of a customer’s devices, appliances and electricity.

Southern’s second announced deal is with Tesla Motors Inc., which earlier this month announced the creation of a new arm, Tesla Energy, along with a new line of electric batteries for homes and small businesses (EnergyWire, May 6).

Southern and Tesla will be testing storage technology for commercial customers — apartments, big-box retails and others, Fanning said. The deal came out of discussions between Tesla and Southern that started more than a year ago, he said.

“You know we never like to make it public until it’s public, and today, it’s public,” he said.

Utilities have been working on how to store electricity on a large scale. Fanning has been talking about energy storage for more than a year, but said yesterday he sees certain types of that storage as a niche right now. This is largely because of cost.

“We think with the technology that [Tesla is] putting out, its equivalent cost is about 20 cents per [kilowatt-hour], that’s certainly more expensive than what we see in Georgia,” he said. But the technology may make more economic sense in other parts of the United States where utility rates per kilowatt are higher, he said.

‘We’re trying to do everything’

Other deals are coming, Fanning said. Southern is testing solar in its residential areas. The company also has been trying to do utility-scale storage deals in California.

“So, we’re trying to do everything,” he said.

Besides Georgia Power, Southern owns and operates regulated utilities in Alabama, Florida and Mississippi. It also owns a wholesale power unit that has been buying large-scale solar projects nationwide and most recently bought a large wind farm.

Fanning said he considers Southern to be a national player, despite its regulated utility concentration in the Southeast. The deals with Tesla and Nest have made it clear that the utility’s profile is set to rise, however.

“I think the real interesting national play is … think about the extension of infrastructure beyond the meter,” Fanning said, adding that he will talk this up on CNBC’s “Squawk Box,” where he is scheduled to appear this morning.

“That is a place we should play,” he said. “We can do that anywhere.”