To kick off SPI, I sat down with the Solar Electric Power Association's Julia Hamm at Solar Central on the SPI tradeshow floor for a quick interview (watch the full video interview below). I wanted to hear mostly about how utilities are continuing to evolve their business plans to incorporate more solar.

“It’s not going to be a fast process,” said Hamm.  She said that there is a lot of discussion taking place behind closed doors and in one-on-one conversations with industry stakeholders but so far those conversations are just talk.  Industry experts point out repeatedly that the solar industry, which is wrought with innovators, entrepreneurs, and bootstrap-type companies is almost fundamentally at odds with the utility industry, which is a highly regulated, 100-year old industry that is inherently risk-adverse.  “They are two very different parts of the energy spectrum,” said Hamm.

But despite these differences, solar is quickly becoming utilities’ fastest growing electricity source. In all, there were some 62,000 PV systems connected to the grid in 2011, a 38% increase over 2010.  With costs coming down and technology improvements increasing the efficiency of systems and the rate at which installations are happening, there is no doubt that in the near future utilities will see solar as THE fastest growing energy source in their portfolios.

Hamm also mentioned that in many cases, solar PV is competitive with other forms of electricity.  In addition, it is an excellent way for utilities to mitigate the risk of future price increases of other fuels.  She pointed out that San Antonio-based CPS Energy, the largest municipal gas and electric utility in the country, is adding 400 MW of large-scale solar capacity to its territory, largely for risk mitigation.  On Tuesday, SEPA awarded Doyle Beneby, CPS Energy’s CEO with its Utility CEO of the Year Award for all of the great strides it has made incorporating solar onto its grid. “By taking a long term look at the value solar adds to a utility’s portfolio, you can very easily justify the cost,” she said.

As for distributed generation, utilities will have to adapt.  Hamm pointed out that it isn’t just PV that’s causing a disruption.  Storage, the smart grid, electric vehicles, micro-grids and other technologies are giving customers more control over their own energy use.  Some experts at SPI believe that utility solar business models won’t evolve until customers start to demand it.

“Solar can be a great solution for utilities but you [solar companies] have to understand what are the problems utilities are trying to solve and how solar can be a solution to [them], she said.