Utilities shouldn't limit clean energy choice

Clean energy is becoming increasingly common. The costs of wind and solar are falling, and the use of renewable energy and energy efficiency technologies is rising.

In some places, renewable energy is becoming the cheapest source of new energy generation. From my perspective as an investor this is nothing short of a revolution in the way the energy business operates. This change is good for energy consumers, the environment, and our economy.

The revolution could also be good for utilities, if they seek to take advantage of it rather than trying to stifle it. Right now, however, Wisconsin utilities are trying to use their regulator to fight changes in the electric sector.

Three Wisconsin utilities — We Energies, Madison Gas & Electric and Wisconsin Public Service Corp. — are pushing for policies that harm the ability of businesses and homeowners to adopt solar energy.

Specifically, third-party leasing and net metering face a severe setback pending a decision by the state's Public Service Corporation. On the surface the efforts of Wisconsin's utilities may seem innocuous. Yes, the terms are technical, but the impact would be significant for the state.

In other states, companies can enter into private contracts with renewable energy companies for power. These arrangements are often referred to as "third-party leasing." As the name implies, third-party leasing allows businesses or homeowners to lease their rooftop or land to a third-party company that owns solar panels and develops a project.

The home or business "host" then receives energy from the system at a discounted rate from the system owner. Third-party leasing has been vital to the recent success of the solar industry as it provides companies and individuals a choice of how they get their electricity without the costs and hassle of maintenance and repairs.

Likewise, net metering allows companies and homeowners an opportunity to participate in the energy market; it ensures fair compensation for the electricity they generate and send back into the grid.

As always, competition benefits consumers, but isn't appreciated by monopolies, like utilities. Third-party leasing and net metering allows this competition by providing opportunities for new players in the energy market: from homeowners, to business owners, to private power companies. The fear of competition explains why the proposal at the PSC is trying to prevent such arrangements.

Wisconsin utilities, however, can only frustrate the desires of Wisconsin homeowners and businesses for so long. Many in Wisconsin are already seeing the benefits of renewable energy. Customers are saving money on their energy use, jobs are being created and investment is coming into the state.

Like Wisconsin residents, America's biggest businesses have realized the benefits of clean energy. In a study we did — Power Forward 2.0 — we found that 60 percent of the Fortune 100 has a clean energy goal. Companies aren't doing this to win brownie points; instead they see a business value in doing so.

By pursuing these goals companies save over $1 billion in energy costs annually. However, in order to get the benefits of clean energy they have to be able to participate in energy markets. Without net metering and third party PPAs they're effectively shut out.

If they succeed, Wisconsin's utilities won't stop corporate investment in clean energy, they'll just drive it to other states without the regulatory roadblocks. At the very least, companies will choose to install solar in other states.

However, we've already documented a couple cases in which access to renewable energy tipped the scales in deciding where companies sited whole facilities. Nebraska recently reeled when Facebook chose Iowa over the Cornhusker State; one of the reasons the company cited was the ability to buy wind energy in Iowa.

Likewise, Michigan lost out on a data center to North Carolina; one of a handful of reasons Michigan missed out was that the state's electric grid was too dirty.

Wisconsin and its utilities have a choice to make: Embrace competition or lose out on investment. The Public Service Commission will decide which way the state goes this fall.

Hopefully the commission and the state will move toward greater competition, greater investment, and more choice.

Stu Dalheim is a vice president at Calvert Investments, a member of the Investor Network on Climate Risk.