With solar panels expected to take on a larger presence in producing electricity, traditional utilities companies could eventually face greater competition. For instance, the Utilities Select Sector SPDR (NYSEArca: XLU) includes a 56.4% position in electric utilities.
“Basically, we provide power to the customer just like a utility does—it’s just at a reduced rate. We like to consider ourselves a producer of power,” Tim Ferdinand, a regional operations manager at SolarCity (NasdaqGS: SCTY), said in the article. “There are government mandates in place that influence the utilities. So right now, they’re accepting solar systems on a pretty wide scale—maybe not for forever, but for the foreseeable future.”
Companies like SolarCity are operating as utility companies, providing electricity to homeowners. Additionally, current government rules require utilities to support green energy programs, so utility companies are giving solar providers some leeway and keeping solar homes on the grid for now.
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Max Chen contributed to this article.