Category Archives: Distributed Generation

The Solar Scenario:
 Utilities Can Profit
 By Embracing The Future

Distributed Generation, Environment, Solar, Utilities, ,

The utility industry has been waging a spirited campaign against state net metering policies for months (see my earlier post here), arguing that these programs unfairly benefit residential solar users and force new costs onto both non-solar customers and the companies themselves. However, judging by a recent report from the Rocky Mountain Institute, those arguments are largely moot—solar is going to win regardless. The real question, RMI said, is whether the industry is going to continue fighting the last war—or start figuring out how to profit from this new reality.

The RMI report, The Economics of Load Defection (which can be downloaded here), modeled the costs of solar and solar plus batteries and compared them with today’s utility costs and expected cost increases going forward. What they found was eye-opening:

 “Smaller solar-only systems are economic today in three of our five geographies, and will be so for all geographies within a decade.”

The five areas studied by RMI were Westchester, NY, Louisville, KY, San Antonio, TX, Los Angeles, CA and Honolulu, HI. The residential results from the study are shown in the chart below.

RMIResidentialChart

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 Utilities Can Profit
 By Embracing The Future →

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Solar + Storage
 Will Soon Be
 The Best Option

Distributed Generation, Environment, Solar, Utilities, ,

In a little-noticed report last month, Deutsche Bank’s markets research team walked through recent developments in the solar and storage industries and offered several bold predictions with enormous ramifications for the U.S. utility industry.

For starters, the company projected that by the end of 2016 total installed solar PV capacity could hit 47,000 megawatts (dc), with more than half of that being built in the next two years. Specifically, Deutsche Bank (DB) forecasts annual installations this year will total 12,000 MW and then jump to 16,000 MW in 2016. By comparison, just 10 years ago there was essentially no installed PV capacity in the U.S. The DB report, Crossing the Chasm, can be found here.

Out of this total, DB estimates that at least 20,000 MW, and perhaps as much as 30,000 MW, will be distributed generation. The push toward rooftop solar, whether on commercial or residential facilities, is expected to be so strong, DB added, that it will largely cushion the blow from the scheduled 2017 step-down of the investment tax credit (ITC). That year, the company said, new PV installations should still top 11,000 MW—easily topping any previous 12 months save the projected 2015-2016 boom years.

DBSolarForecast

And these aren’t just forecasts. San Francisco-based Pacific Gas & Electric Company announced this week that it now has 150,000 solar-using customers spread across its California service territory—with 45,000 of those being added in 2014 alone. On average, the company said, it is now connecting about 4,000 new solar customers every month.

The rationale for the solar surge is easy to understand, DB continued—it all comes down to economics.

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 Will Soon Be
 The Best Option →

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‘Trust Us,’ Utilities Argue:
 PV Cost Shifting Is Bad,
 EV Cost Shifts Are Good

Distributed Generation, Solar, Utilities, ,

The utility industry is open about its opposition to residential PV solar—preaching endlessly that homeowners with PV panels enjoy what amounts to a free ride due to state net metering rules that require utilities to buy the electricity from these distributed resources without being able to charge those customers for their continued use of other grid services.

At the Edison Electric Institute’s annual Wall Street presentation in February, for example, David Owens, the association’s executive vice president, told the analysts that it is “critical and fair that all electricity cus­tomers who use the electric power grid continue to share equitably in the costs of maintaining it and keeping it operating reliably at all times. Rooftop solar customers still rely on the grid and its services around the clock. Even at peak output, rooftop solar systems need the support of the grid to start large motors like air condi­tioners and refrigerators. And, net metering as a policy does not even exist without a grid con­nection. So, at the end of the day, as long as we are connected to the grid, we still use it and we all should continue to pay for it.”

Similarly, San Francisco-based PG&E, which touts itself as having the most residential PV customers of any U.S. utility—with some 100,000 customers having some amount of solar installed—is also quick to criticize the existing California net metering program, saying it has shifted costs unfairly from solar customers to other ratepayers not using PV or another distributed generation resource.

The extent of this cost shifting is much in debate, with utilities on one side and solar industry officials on the other. But the reality is, the debate has nothing to do with cost shifting—it is market share that is the real concern.

Continue reading ‘Trust Us,’ Utilities Argue:
 PV Cost Shifting Is Bad,
 EV Cost Shifts Are Good →

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LBNL: Americans Willing
 To Pay Major Premium
 For Solar PV Systems

Distributed Generation, Environment, Solar, Utilities, ,

 

In a groundbreaking new study, researchers at DOE’s Lawrence Berkeley National Laboratory have shown that American homebuyers are willing to shell out a significant premium for solar PV-equipped homes. In other words, solar sells and sells big.

The study, with the mind-numbing title Selling Into The Sun: Price Premium Analysis of a Multi-State Dataset of Solar Homes, looked at home sales from 2002-2013 and matched PV and non-PV homes by size, location and several other variables. All told the analysis compared sales information from almost 23,000 homes, 18,871 without PV and 3,951 with PV, spread across eight states (mainly in California, but also including Florida, New York, Massachusetts, Connecticut, Pennsylvania, Maryland and North Carolina).

What the authors found was eye-opening: “Home buyers consistently have been willing to pay more for a property with PV across a variety of states, housing and PV markets, and home types.” And the premium is significant, the authors added, running to about $15,000 for an average-sized 3.6 kilowatt-PV system.

Another key finding, the authors said, is that the premium exists regardless of whether the PV system is incorporated into a newly constructed house or retrofitted onto an existing home. In fact, their research shows that the premium was actually slightly higher for PV systems installed on existing homes than it was for PV units incorporated into new construction (see figure below). Do-it-yourselfers take note, PV might be the home retrofit project that actually pays for itself.

SolarPremium

Two other interesting findings highlighted by the authors were:

  • The PV premiums were consistent throughout the 11-year period of the study, even though the housing market during those years changed significantly, from the boom years of the early-to-mid 2000s, to the recession crash of the late 2000s, and then on to the slow recovery of the early 2010s.
  • The PV premium is not a California-specific phenomenon, but rather was found in all eight states; a finding that “should give stakeholders outside of California greater confidence that PV adds value to homes in their markets.”

Previous studies had indicated that such PV premiums existed, the authors continued, but the new study is a better indicator because of the size of the dataset, almost 4,000 PV-equipped homes, its lengthy time frame and broad geographic scope.

One area that bears further investigation, the authors said, is whether the PV premium exists for third-party owned systems. The current research only looked at homeowner-owned units, they said, but since solar PV leasing is becoming such a large part of the market, studying that segment of the industry would be valuable as well.

The study, funded by the U.S. Department of Energy’s SunShot initiative, can be found here.

–Dennis Wamsted

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Energy Storage Industry
 Takes Huge Strides
 To Commercial Viability

Distributed Generation, Utilities

The country’s nascent energy storage industry had much to be thankful for in November—a record-shattering procurement announcement by Southern California Edison, active discussion in Texas of a monumental storage proposal, and two large Illinois projects that are slated for commercial operation sometime next summer.

SCE said in early November that it planned to purchase 261 megawatts of energy storage resources for use in its Los Angeles-area service territory. That total pales in comparison to the 1,382 MW of new gas-fired capacity the utility announced the same day (all part of its plan to replace the baseload capacity it lost when the 2,150 MW San Onofre nuclear power plant was shuttered in January 2012), but as Colin Cushnie, SCE’s vice president for energy procurement and management pointed out when the winners were announced, “This procurement effort…marks the first time SCE has contracted with energy storage projects through a competitive solicitation.”

And, while small in overall terms, the California Energy Storage Alliance noted that the SCE announcement represents the “largest grid-connected energy storage purchase in U.S. history.”

Continue reading Energy Storage Industry
 Takes Huge Strides
 To Commercial Viability →

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