Residential rooftop solar energy continues to expand at a rapid pace in many states. This growing market dynamic is affecting the business model of traditional electric utilities. Some utilities have sought to impose obstacles to the growth of competing solar rooftop providers, citing concern that as more homes produce their own electricity, the corresponding loss of revenue for utilities will hamper their ability to recover the fixed costs needed to maintain power grids — a claim solar providers sharply dispute. Some other utilities, including some that formerly opposed the growth of independent solar, have responded by entering the residential solar market as a direct provider of rooftop systems.

As a recent example, Arizona’s largest utility provider, Arizona Public Service (APS), proposed in July an up to $70 million plan to lease thousands of residential rooftops and build solar arrays in exchange for a utility bill rebate. Customers would receive a $30 monthly credit for making their rooftops available to APS. Tucson Electric Power, another Arizona provider, proposed a similar leasing program in which homeowners would allow the installation of rooftop solar panels on their homes in exchange for a fixed monthly power bill. These leasing programs, which have yet to be approved by the Arizona Corporation Commission, have come under fire from some solar developers as motivated by monopolistic behavior.

Similar skirmishes are occurring throughout the United States. New York regulators are considering a plan to allow utility companies to own residential rooftop systems, and a straw plan issued recently received comments from hundreds of interested parties addressing utility market power concerns. In June, South Carolina passed a law allowing utilities to offer solar leases, but the law was heavily negotiated by solar developers to prevent utilities from recovering installation costs through rate increases. And a bill in Washington that would have given utilities control of the solar leasing market failed to pass earlier this year after substantial lobbying by solar advocates.

Debate will continue in the short-term as various jurisdictions sort out the relationship between solar developers and traditional utilities.