A Solar Strategy for Cable

By Steve Nelson -- Multichannel News, 9/27/2010 12:01:00 AM

Suppose you opened your electric bill and it read: Amount due: $1,000,000,000. That would get your attention. $1 billion. Well, that’s the annual electricity consumption of the cable industry, and it’s got the attention of operators. What’s more, with new services proliferating and electricity rates rising, the tab could double or triple in five to seven years, according to the Society of Cable Telecommunications Engineers.

What to do about it? Energy efficiency must always be the first approach to cutting energy bills. But in this column, I’ll focus on how cable can employ solar technology to generate power without a big hit to capital budgets and how that can be the first step in a five-step solar strategy for cable.

Photovoltaics, solar panels that generate electricity from sunlight, are a proven technology in use for decades. I was involved with a PV demonstration at the 1980 Winter Olympics. With panel prices declining, plus federal and state incentives for installing solar, PV power is becoming cost-competitive with utility electricity.

What really makes PV practical is a financing mechanism for solarizing a building with no capital cost to its owner or occupant. Under this arrangement, the PV system is owned, installed and maintained by an outsource service provider, who sells power generated by the system to the building occupant on a payas- you-go basis through a longterm contract called a Power Purchase Agreement.

Over 70% of commercial, industrial and institutional PV installations are now done with PPAs, to cut electric bills and protect against utility-rate increases. So step one of the strategy is for operators to use PPAs to install solar panels on their facilities, especially headends, with their racks of power-hungry equipment and relentless need for air conditioning.

But cable has far more at stake than just saving energy. In today’s competitive marketplace, it’s essential to project a positive image to current and prospective customers. Ninety-two percent of Americans believe we should be using solar energy, according to a recent survey done for the Solar Energy Industries Association. Step two, then, is for cable to conduct communityrelations initiatives around its solar installations, both as a public service and a competitive tactic.

Step three takes cable’s outreach efforts even further, by providing customers with information on how they too can use solar and conserve energy. Consumer economics may well be a factor in last quarter’s first-ever decline in total multichannel video households. So helping cable customers save money on energy is not only good for cable’s image, it’s good for cable’s business. Informational programming about solar and energy conservation offered via video on demand would provide another opportunity to underscore the value of VOD and drive usage.

Step four gets cable even more involved with energy. Its broadband pipes can support new home energy metering and monitoring devices, as part of upgrading our electrical infrastructure to a smart grid. There is potential business for cable in deploying such devices. There is also an opportunity to partner with companies installing PV systems on homes. They want to sell their products to the homeowners whom cable serves and can target market. And they need capital to grow their businesses.

Step five actually puts cable operators into the business of owning and installing home PV systems under PPAs. This is not as far-fetched as it may seem. Cable has the resources needed for the business: field techs, trucks, customer service and sales reps, and billing systems.

True, it’s much more expensive to provision a solar customer than a cable one. A home PV system can easily cost $15,000 and up, but it throws off a 30% federal tax credit and accelerated depreciation, plus additional financial incentives in some states. Once installed on a customer’s roof, the system is a cash cow, with virtually no churn and very minimal operating costs. Unlike cable, there is no rising cost for “content” — the sun’s rays will always be free.

Today, out of 70 million detached single-family homes, maybe 125,000 U.S. households have PV systems. By first taking steps one and two, using solar on its facilities and promoting that in the community, a cable operator can save money, improve its image, and gain experience with a technology business in which only the sky is the limit.

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Steve Nelson, former producer of the Cable Channel, is founder and CEO of Solar Electric Service Corp.