All of this is challenging, because the system that we have in the U.S. — the way the economics are set up and the regulation and politics around electricity — is 100 years old. That’s a big deal. All these things are work-arounds.
S+B: Who’s doing it right?
CULLEN HITT: California; that’s no surprise. New Jersey is the second-biggest solar state in the country, because they decided that they didn’t want to be dependent on fossil fuels alone. They don’t have a lot of room to build conventional power plants, and they don’t want to import everything, build more transmission lines, and so on. It’s a surprise to people, because New Jersey is a big industrial state with a lot of users, but they’re very aggressive in the solar space.
Arizona also sometimes surprises people. Of course, the sun shines there, but people tend to think of it politically as being a more conservative state. Arizona does, however, understand the value of solar from an economic standpoint. Water resources are a major issue in the Southwest, and solar typically uses less water than traditional power generation. For policymakers in Arizona, solar looks more promising in the long term when they add that benefit to the equation.
Every state is different. But the four buckets I talked about form the basic model. Ask yourself: What are the barriers? Are there state laws and regulations that ease those barriers? What are the rate structures, interconnection rules, and net metering rules? What do the economics look like — tax incentives, rebate incentives — and are they sustainable over time? These are the things that we look to replicate.
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- Laura W. Geller is senior editor of strategy+business.