From The Motley Fool

Don’t look now, but corporate America may lead the next phase of the renewable energy revolution. And that’s terrible news for utilities across the country.

Companies are looking at renewable energy as a way to save costs, lock in rates, and go green, and they may have more power to upset the utility business model than even a million homeowners installing solar panels. The defection of even a small number of large companies from the traditional grid could cause havoc in the utility industry.

The bottom line is reason 1, 2, and 3

If you look at energy from a company’s perspective, there are a lot of advantages to looking into buying your own renewable energy and forgoing the utility’s monopoly. Rates for solar energy in sunny states are now $0.05 per kWh, or less — that is, less than half of what the average commercial customer pays today.

The simple fact of the matter is that utilities have little incentive to provide electricity at lower prices to commercial customers. Their incentive is to build more and more assets and then spread those costs among customers, which they’ve done for a hundred years.

Then think about the incentives for utilities and customers in the long term. A utility has no ability, or interest, to control commodity costs long-term. If natural gas prices rise, the utility will just pass the cost on to customers, as is its right as a monopoly. But commercial customers want stability and predictability in costs. If they can lock in long-term power purchase agreements from renewable energy, why not lock up the lower cost?

To put the finances of energy choice into perspective, leaving the grid was so valuable forMGM Resorts (NYSE:MGM) that it recently said it will pay $86.9 million to leave NV Energy and buy electricity on its own. Seriously, it’s paying nearly $90 million just to cut the cord to the utility. Most customers, like Apple (NASDAQ:AAPL), which is buying energy from third-party plants and building some of its own plants, don’t even have to pay fines, so the economics are even better.

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