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Rocky Mountain Institute

Tendril has a suite of digital tools to help utility companies market community solar

Tendril Pilots New Program For Community Solar

by Steve Hanley June 9, 2015

Tendril is a Denver-based software company that has created a new program to help utility companies identify customers for community solar projects. The software will also provide critical information to customers about their community solar experience.

According to a study by the US Department of Energy, almost half of all rooftops in America are unsuitable for residential solar systems because they face the wrong way, don’t have the proper pitch, or have too much shade. In addition, there are lots of families that live in apartments or don’t plan to own their home long enough for a home solar system to pay for itself.

For all those reasons, community solar is the ideal answer. But a schism has arisen between utility companies and customers. Utilities look at every kilowatt-hour of electricity generated by solar panels as lost profit for themselves. Tendril looks at the situation differently.

Tendril CEO Adrian Tuck says utilities can leverage their access to consumers and their low cost of capital to deliver solar in a way that benefits their bottom line and benefits customers as well. “We believe in the sharing economy, the Uber and Airbnb type of model of people not necessarily wanting to own all of their assets, but rent them and share them,” said Tuck. “This is a growth area, and community-based products and services will be natural places for utilities to go.”

That sort of thinking is very much in line with proposals made recently by the Rocky Mountain Institute, which thinks utilities have a built-in ability to market services other than electricity. It says utilities should be selling home solar systems rather than letting SolarCity and others reap all the rewards.

According to Greentech Media Research, the US community solar market reached a total installed capacity of 63 megawatts at the end of 2014, up from just 2 megawatts in 2010. Forecasts show an additional 400 megawatts coming online in the next two years alone.  Tendril believes its technology is key to making that opportunity a reality. How?

“The challenge with community solar is how to identify customers and do outreach to customers in ways that will excite them about the concept and get them to sign up,” said Tuck. “And then, once you’ve got them signed up, [you need to] provide an intimate experience for the customer so they can see their solar production just as if it was on top of their roof.”

Part of the Tendril package identifies existing utility customers who may be good candidates to participate in a community solar program. It also figures out who already has a residential solar system, so the utility can avoid marketing to them. It says its program results in 2 to 3 times more successful converts to community solar than just sticking a flyer in the monthly electric bill or traditional advertising.

Once a household becomes a customer, Tendril’s platform allows residents to monitor their solar energy production and consumption “just as if it was on your own home,” says Tuck. This information allows customers to find out exactly how much of their energy needs are being met by community solar, possibly compelling them to change their behavior to reduce overall energy use.

Perhaps the best news about Tendril’s new approach is it helps utility companies and customers to view each other as partners who are making renewable energy a reality rather than as adversaries. That in and of itself could be a big step forward for sustainable power.

June 9, 2015 0 comment

Demand for electric power may be cut in half in the northeast by 2030 says RMI report

Market Research

Demand For Grid Power May Be Cut In Half

by Steve Hanley April 12, 2015

written by Steve Hanley

According to Bloomberg News, demand for grid power in the Northeast may be cut by half by 2030 due to the rapid increase in home solar and battery storage systems.

A report dated April 7 from the Rocky Mountain Institute estimates utility companies in the area may lose as much as $35 billion in sales, thanks to home owners and small businesses relying more and more on solar power to meet their energy needs. That report also says the utilities will need to spend more than a trillion dollars over the next 15 years to maintain the existing electrical grid.

“For owners and operators of central generation and transmission facilities, our findings are likely bad news,” RMI staffers James Mandel and Leia Guccione wrote in the report. “Utilities need to find new business models that incorporate these systems into their networks.” The Institute issued another report recently that urges utilities to leverage their unique relationship with customers in order to develop new sources of revenue using the Integrated Utility Services model RMI developed for Fort Collins Utilities in Colorado.

“Future energy policy must include support for a clean, affordable, reliable grid for everyone, while enabling utility programs that encourage targeted, non-traditional investments like the development of customer-based technologies where it’s beneficial,” Allan Drury, a spokesman for New York-based Consolidated Edison Inc., said Tuesday.

Rudy Wynter, president of National Grid, which supplies power to 3.4 million customers in New York, Massachusetts and Rhode Island, disagrees: “Larger scale solar installations and wind are much more economic when done at utility scale,” said Wynter.

Regulators in New York, California and Hawaii are already considering ways to allow power companies to earn money while accommodating more solar and power storage on their grids. California utility owners PG&E and Edison International say there are growth opportunities from making investments to allow for two way flows of electricity in their grids as more customers install solar and storage units.

“These conversations about new regulatory frameworks and rate structures need to be happening more quickly than at present,” RMI’s Guccione said in a telephone interview. “There is a real, actual and significant cost to doing nothing.”

April 12, 2015 0 comment

Community Solar Energy Storage Going Solar Market Research Other Renewable Energy Rooftop Solar Solar Research

Solar Electricity’s Future: Grid-Connected vs Off-Grid

by Aisha Abdelhamid April 7, 2015

written by Aisha Abdelhamid

The future in which power company customers transitioning to solar electricity generation can choose to either maintain grid connection or cost-effectively generate off-grid has arrived. The implications of this reality, however, are only just beginning to dawn.

Rising on the horizon of a new solar energy era, concerns for stranded assets are keeping power company stakeholders up at night. Equally disconcerting, low- and fixed-income electricity consumers with no financial ability to upgrade to solar will find themselves unable to handle higher utility bills as electricity prices increase, due to increased grid-defection.

Projecting the Rising Solar Energy Era

Only with an informed roadmap of the economic implications of America’s rising love affair with solar energy, can we navigate a socially just and economically viable way forward. The Economics of Load Defection, a new report released today by Rocky Mountain Institute (RMI), offers this roadmap.

Noting that retail prices for grid electricity are climbing while costs for solar PV and batteries are declining, The Economics of Load Defection projects the coming electricity load and revenue loss that utilities could well face in the coming 10-15 years. Implications for utility companies and regulators are clearly detailed in the new report, as well as possible paths forward.

solar-plus-battery systems are expected to play a major role in America’s future electricity grid. But exactly what that role will be is not yet clear. Retail pricing structures, utility business models, and regulatory frameworks are all evolving at a steady pace, and outcomes of these evolutionary processes will largely determine which trajectory the grid will follow into the rising solar energy era.

Focusing on Grid Load and Sales Revenue Economics

As the report authors point out, solar-plus-battery systems are increasingly becoming a cost-effective option for property owners. And, as these utility customers determine and adopt economically optimal solar energy configurations, their dependence on the grid for meeting electricity needs decreases significantly, while solar PV rises to supply the majority of their needs at significantly reduced cost. Although this sounds alarmingly like an S.O.S. from a sinking ship, the report authors offer this for reassurance:

“While the presence of such customer choice has important implications, the number of customers who would actually choose to defect is probably small. The far more likely scenario is customer investment in grid-connected solar-plus-battery systems. Since such systems would benefit from grid resources, they could be more optimally sized, thus making them smaller, less expensive, economic for more customers sooner, and adopted faster. More specifically how system configurations and economics would evolve over time, and what magnitude of customers, load, and revenue that could represent, are the focus of this analysis.”

James Mandel, RMI Principal and report author notes, “These findings should be compelling for customers and technology providers.” Mandel continues, “No matter how expensive retail electricity gets in the future, customers that invest in these grid-connected systems can contain their electricity costs at or below a ‘peak price,’ yielding significant savings on their monthly utility bill.”

“This is not all risk,” explained RMI manager and report coauthor Leia Guccione. “Because these solar-plus-battery systems are grid-connected, they can offer value and services back to the grid. We need not see them only as a threat.”

The Implications of Increased Electricity Load Defection

Nevertheless, exploring the implications of increased load defection, the report points out that “even if only a fraction of customers adopt such systems, utilities could face lost kWh sales from central generation, potentially undermining revenue needed for ongoing grid investment and maintenance. For example, in the Northeast United States, by 2030 maximum residential and commercial load defection could total 140 million MWh and $35 billion per year.”

In reality, however, the report authors appear to favor utility company adoption of solar-friendly regulatory reform and solar energy grid-connection strategies as a way of slowing the arrival of the inevitable death of the grid. According to the report, even the prevalent “net energy metering” (NEM) strategies and more recently proposed “fixed energy charges,” are not strong enough measures to control ultimate load defection:

“Net energy metering is a contentious yet prevalent policy that has successfully supported distributed solar PV’s growth in the U.S. Some argue that it hastens load loss from the grid (net-metered solar PV customers quickly reach effectively zero net grid purchases) and that abolishing net metering will preserve grid load.

Our findings suggest that eliminating net metering merely delays inevitable significant load loss. Grid-connected solar-plus-battery systems will gradually but ultimately cause a near-total load loss even in net metering’s absence. However, fixed charges—which some utilities have recently proposed—don’t ‘fix’ the problem. Similar to our “with” and “without” NEM scenarios, residential fixed charges would likely alter (i.e., delay) the economics for grid-connected solar and solar-plus-battery systems, but likely wouldn’t alter the ultimate load defection outcome. Customers might instead wait until economics and other factors reach a tipping point threshold and more dramatically “jump” from grid dependence to off-grid solar-plus-battery systems that offer better economics for electric service.”

Major Findings of The Economics of Load Defection

The major findings reported in The Economics of Load Defection are as follows:

• Solar-plus-Battery Systems Rapidly Become Cost Effective

From the utility customer’s economic perspective, a grid only system configuration evolves in the near term to grid-plus-solar, and then to grid-plus-solar-plus-batteries in the longer term. The report states, “Grid-connected systems of this analysis become economic for customers much sooner, with substantial utility load loss well within the economic life and cost recovery period for major assets. Smaller solar-only systems are economic today in three of our five geographies, and will be so for all geographies within a decade. New customers will find solar-plus-battery systems configurations most economic in three of our geographies within the next 10–15 years.”

• Solar PV Supplants the Grid Supplying the Majority of Customers’ Electricity

The utility customer initially receives the majority of his electricity supply from the grid. “Over time as retail electricity prices from the grid increase and solar and battery costs decrease, customers logically reduce their grid purchases until the grid takes a backup-only role. Meanwhile, solar-plus-battery systems eventually provide the majority of customers’ electricity. For example, in Westchester County, NY, our analysis shows the grid’s contribution shrinking from 100% today for commercial customers to ~25% by around 2030 to less than 5% by 2050. Inversely, solar PV’s contribution rises significantly to make up the difference.”

• Potentially Large kWh Defection Could Undermine Revenue for Grid Investment Under Current Rate Structure and Business Models

The report authors estimate that the grid requires an approximate investment of $100 billion a year, or $2 trillion between 2010 and 2030. This annual investment is expected to be recovered through electricity sales revenue. They point out, however, that a large impact on system economics can come from a relatively small decline in kWh sales revenue. “Notably, our analysis shows that grid-connected solar-plus-battery systems become economic for large numbers of customers, and those systems have the potential to supply greater and greater portions of customers’ electricity. Assuming customer adoption follows optimal economics, the magnitude of potential kWh defection from the grid is large.”

As an example, the report projects what the maximum possible kWh sales erosion might be in the U.S. Northeast by 2030, only 15 years away:

Residential:

• ~58 million MWh annually
(50% of utility residential kWh sales)
• 9.6 million customers
• $15.4 billion

Commercial:

• ~83 million MWh
(60% of utility commercial kWh sales)
• 1.9 million customers
• $19.4 billion

Significant Implications vs Emerging Opportunities

While implications from the above findings could be very large, the report also recognizes emerging opportunities. Although grid-connected customers are projected to represent significant electricity load loss, the customers’ grid-connected solar-plus-battery systems “can potentially provide benefits, services, and values back to the grid, especially if those value flows are monetized with new rate structures, business models, and regulatory frameworks.” Crucially, grid-connected customers are projected to maintain their connection to the grid, as long as grid defection isn’t encouraged by penalizing charges and/or changes to retail electricity price rate structures.

Participants in the electricity system market and other stakeholders are facing profound impacts which, according to the report authors, come with the following considerations:

• For customers that invest in solar PV and solar-plus-battery systems, the emergence of choice is good news.

Report analysis suggests that, “with smart solar-plus-battery investments, customers could see peak pricing emerge, insulating themselves from rising prices for grid-supplied electricity.” However, traditional grid-supplied customers would see higher pricing from rising retail prices, and defected customers (off-grid) would face the necessity of larger, more expensive stand-alone solar-plus-battery systems.

• For owners and operators of central generation and transmission (such as independent power producers and merchant power plants), report findings are likely bad news.

The report analysis predicts that the decline of sales from central generation will accelerate with the adoption of solar-plus-battery systems, and the risk of stranded assets is real. As noted in the report, “Existing assets still within their economic life and cost recovery period will serve a smaller and smaller remaining load, requiring price increases to cover costs and returns. Meanwhile, assets in the planning pipeline won’t see the future demand to justify their capacity and generation output.” Reductions in peak price spikes are also likely in deregulated markets, and solar-plus-battery systems are additionally expected to encroach on markets for ancillary services.

• For distribution grid operators (such as wires-only utilities), the emergence of distributed solar PV and batteries is good news.

Distribution grid customers with solar and battery systems are anticipated to provide value to the grid including upgrade deferrals, congestion relief, and ancillary services. However, the report notes that in order to fully capitalize on these opportunities, new business models, pricing schedules, and regulatory reforms need to evolve.

• For vertically integrated utilities, these systems will strain current business models, and adjustments will be necessary.

New business models are needed to fully capitalize on the rising adoption of solar PV and batteries. The report authors anticipate that similar challenges will be faced by distribution utilities whose revenue depends on volumetric sales of electricity.

Stranded Assets vs Integrated Grid

Jules Kortenhorst, CEO of Rocky Mountain Institute and Carbon War Room notes, “Today’s electricity system is at a metaphorical fork in the road. Down one path are pricing structures, business models and regulatory environments that favor eventual grid defection.” The report authors explain that this path favors grid defection, resulting in an upward price spiral. This path leads to the inevitable stranding of grid assets serving a dwindling load.

Adopting an off-grid solar-plus-battery option will become increasingly appealing for increasing numbers of customers, leading to skyrocketing prices for customers remaining on the grid. In particular, low- and fixed-income customers will be forced to bear a disproportionate burden of the rising retail price for electricity. Down this path, resources on both the grid-side and the customer-side reach a point of being overbuilt and underutilized, a classic example of stranded assets leaving excess capital on both sides of the electric meter.

On the other hand, RMI CEO Kortenhorst explains this possible future, “Down another road, those same factors are appropriately valued as part of a transactive grid with lower system-wide costs and the foundation of a reliable, resilient, affordable and low-carbon grid of the future in which customers are empowered with choice.”

This alternative path favors business models, regulatory reforms, and stable price structures in which, as the report authors suggest, “distributed energy resources [DERs] such as solar PV and batteries – and their inherent benefits and costs – are appropriately valued as part of an integrated grid.” Such an integrated grid offers a future, according to the report, where grid and customer-side resources collaborate with far greater efficiency in the generation and usage of both capital and physical assets.

Optimizing the Future Grid of the Solar Energy Era

These two pathways into the rising solar energy era are not set in stone. There is ample room for innovative thinking, entrepreneurial planning, and socially just strategies. However, the decisions being made today are likely to set us on a course that becomes more and more difficult to correct. The time frame for optimizing the future grid is relatively short, and growing shorter and more urgent for some geographical regions where solar options are already prevalent and appealing.

Kortenhorst summarizes this urgent need for determining the best path forward: “That’s why RMI is focused on new utility business models, regulatory reform in places like New York, and accelerated adoption of rooftop solar and other DERs—so that the grid of the future can provide customers reliable, clean, affordable power for decades to come.”

Founded in 1982, Rocky Mountain Institute is an “independent, nonprofit think-and-do tank.” Engaging with businesses, communities, and institutions, RMI promotes advanced market-based solutions to drive a cost-effective divestment from fossil fuels to efficiency and renewables. Their work aims to accelerate and scale replicable solutions that transform global energy use for a clean, prosperous, and secure future.

Click here to download RMI’s new report, “The Economics of Load Defection.”

Residential and commercial load defection graphs. © RMI.org

All Photo Credits: © RMI.org

April 7, 2015 4 comments

Community Solar Going Solar Policy Research Solar Research

Shared Solar: How To Get Community Solar To The Next Scale

by Rocky Mountain Institute February 14, 2015

written by Rocky Mountain Institute

Originally published on RMI Outlet.

Download RMI’s report Bridges to New Solar Business Models: Opportunities to Increase and Capture the Value of Distributed Solar Photovoltaics

What happens when you really want solar but the obstacles seem too great? You may not have a suitable space. Or there may be a tree blocking your roof. Or you live in a condominium where you don’t have your own roof.

This is where promising approaches for increasing customer access, such as shared solar, come in. They create opportunities for customers to get the benefit of distributed solar without putting it on their own roof. With shared solar projects (also referred to as “community solar”) customers either own or rent a portion of a larger project that is off site and then receive a credit for the generation on their electricity bill. Often, the customer sees a cost premium in the near term and then some economic benefit for the subscription, usually through rates that stay steady rather than increase over time.

BRINGING SHARED SOLAR TO SCALE

Right now though, shared solar projects and other shared renewables programs have not been able to scale. While the largest program in the country today is 20 MW, only a handful are greater than 1 MW. The majority of these projects are between 30 and 100 kW. So that means most programs have between ~40 customers on the low end and ~600 customers on the high end.

So what is required for these types of programs to scale? As we discussed in Bridges to New Solar Business Models, for solar PV broadly to continue to scale, shared solar specifically has to become more valuable for utilities, solar companies, and customers. This means that either the benefits solar PV projects provide have to increase or the costs of the projects have to decrease. Unlocking this value will require increased collaboration between solar companies and utilities, including for shared solar programs.

Solar companies already play an important role in these programs. They typically procure project financing, install the project, and arrange the power purchase agreements with the utility. Then, over the lifetime of the project, they service the PV project, making sure it operates properly and is maintained. When it comes to enrolling customers, they often take the lead on the marketing aspects, providing customers with brochures and pamphlets and online bill calculators to estimate potential savings.

Utilities have also provided important support for these projects. They often manage the program, facilitate the tie between customers and the PV projects, handle the customer billing, and enable the interconnection of these projects onto the grid.

SOLAR COMPANY AND UTILITY COLLABORATION

But increased collaboration between the solar companies and utilities could help unlock additional value that can benefit all customers. Today, utilities have access to all of the customers in their territories, creating opportunities to educate their customers on the possible options and use their brand to decrease some customers’ concerns about new service providers. They can help identify potential sites, as they’re familiar with the land and customers in their territory. They can also provide greater market certainty to solar companies by committing to buy solar for a period of time and creating a sufficient runway to reach volumes where solar companies can start to drive down the total costs of installations.

Combining solar companies’ strengths with utilities could create an environment that can yield additional value. Possible elements of a project better positioned to scale could include:

Collaboration to identify sites: Many customers want to be able to see and show the solar PV projects they buy power from. However, current community solar efforts usually focus on developing projects on sites that will be interconnected quickly and have low lease terms. Projects don’t have to be located at one site though, and could be more valuable if they’re located near customers and installed at certain locations. Utilities and solar companies could work together to identify a portfolio of sites, including remote fields, parks and parking lots, and nearby customer rooftops, and then provide customers with options and allow them to choose to buy from the sites they find most desirable.
Clear and transparent procurement processes: Today, solar projects are typically procured through a one-time request for proposals (RFP). However, solar companies could decrease their costs if they have higher volume certainty over time. They could do this by revising the RFP process, seeking a multi-year contract (e.g., three to five years) for distributed PV installations. As part of this deal, the solar company would need to meet certain performance benchmarks over time.
Joint marketing: Surveys show that many customers are still unaware of the opportunities in investing in solar PV. In fact, many of these shared solar programs have enrolled subscribers through word-of-mouth alone. The utility can help increase subscribers quickly, using its access to customers to increase awareness through bill inserts and online engagement on the utility webpage. Also, the utilities and solar companies can co-brand and co-message the program, emphasizing the simplicity and convenience— customers won’t need house visits and crews to install equipment on the customers’ premises, will not be involved with any on-site operations and maintenance, and could change locations without the hassle of relocating any physical equipment. Shared solar could also create an opportunity to market other utility programs. For instance, a customer who is interested in community solar could also be someone interested in efficiency or electric vehicles, and it makes sense to either offer bundles of measures together or target customers for new technology offerings as they become available.
Community engagement: Due to the nature of shared projects located near customers, there’s a reason these programs have been called “community solar.” Yet few programs have fully embraced a community-oriented approach to encourage high levels of customer participation. In addition to traditional utility access channels, the program can meet customers where they are, engaging possible participants at community centers, including places of worship, to generate enthusiasm. Further, as some solar companies have started to do with referral programs, the utility and solar companies can work together to develop a referral program that creates community champions and rewards customers for providing program referrals.

Examples of existing shared solar programs taking some of these concepts and putting them into practice include:

Arizona Salt River Project customers sign up for kW blocks and buy the output at a fixed rate, which represents a near-term premium of ~10 percent but also provides participants with bill savings if rates increase. More than 1,000 residential customers and 100 schools have participated in the program.
Duke Energy’s Green Source Rider program in North Carolina enables nonresidential customers to displace new load with renewable energy. Duke handles customer applications and then arranges power purchase agreements with renewable energy suppliers. Participants buy the generation at the power purchase agreement rate and receive a credit based on avoided energy and capacity rates.
A rural cooperative in Minnesota, Steel-Waseca Cooperative Electric, has a new program that offers a steep discount for customers on their first panel if they agree to install a free electric water heater that responds to utility price signals.

TURNING CONCEPTS INTO ACTION

While it will take some initiative from utilities, solar companies, clean energy advocates, and customers to get these types of programs going, none of these concepts will require regulatory overhaul to get there. Instead, turning these concepts into action will start with increased engagement between solar companies and utilities, like we’re seeing in efforts from around the country, such as the More than Smart Initiative in California or the e21 initiative in Minnesota. These initiatives are convening a diverse group of stakeholders to create a shared vision for what programs and policies should look like. They encourage collaborative thinking to identify approaches for meeting customer needs, and strategies to ensure that a grid with increasing amounts of distributed energy resources stays affordable and reliable.

There may not be consensus on some aspects of the shared solar program, such as the pricing mechanism, and final decisions will likely require negotiation in front of the public utility commission or the regulatory body that advises on utility matters. In theses cases, it’s critical that the costs and benefits are transparent, and that all actors are sufficiently motivated to create value. This could be assured by providing incentive mechanisms for the utility and the solar companies, and by establishing a pricing mechanism that fairly credits program participants for solar benefits while ensuring fixed cost recovery and minimizing cross-subsidies.

Increasing access to solar for customers will be important for enabling distributed solar to scale in a way that can be fair and equitable. While the initial efforts in this area have been promising, there are certainly ways that utilities and solar companies can incorporate new approaches that will help further reduce project costs and also make the benefits easier to access. With these increases in value, we can envision a thriving and sustainable market for distributed solar PV.

Download RMI’s report Bridges to New Solar Business Models: Opportunities to Increase and Capture the Value of Distributed Solar Photovoltaics

Further blog posts will cover two other ways of increasing solar’s value that are discussed in RMI’s report Bridges to New Solar Business Models—utilizing distributed solar as a grid resource and incorporating distributed solar in technology bundles.

See other blogs in this series:

Collaboration is Key: How innovative solar business models can benefit all

Image by BlackRockSolar (CC BY 2.0 license)

February 14, 2015 0 comment

Policy Research PV Rooftop Solar Solar $Solar Policy Solar Research

Solar Power Benefits & Costs (Report)

by Zach July 27, 2013

written by Zach

Rooftop solar panels from underneath. Credit: Zachary Shahan (CC BY-NC-SA license)

The Rocky Mountain Institute’s eLab has created a new report on solar power benefits and costs (distributed solar PV benefits and costs, to be specific). This is a critical effort, and a very useful report to help that effort along. Better valuation of distributed solar PV (DPV) is sorely needed in order to steer the quite complicated electricity system in the right direction (technically, financially, and politically).

“This analysis of current structural misalignments (including net-metering and volumetric rates) offers a foundation to support smart policymaking and electricity pricing structures across the country—which can help avert the impending collision of solar costs and grid prices,” an email to me from a Rocky Mountain Institute (RMI) staff member noted.

“Deciphering the costs and benefits of distributed energy services is critical to ensure better technical integration and economic optimization. As the penetration of DPV and other customer-sited resources increases, accurate pricing and market signals can help align stakeholder goals, minimize total system cost and maximize total net value.”

A huge thanks to RMI for putting this report together. Here’s the full news release from earlier this week:

Rocky Mountain Institute’s eLab Releases Review of PV Benefits and Costs
Comprehensive study builds foundation for accurately valuing distributed solar

Snowmass, Colo.—July 22, 2013—Today, Rocky Mountain Institute (RMI) announced the release of a report from the Electricity Innovation Lab (e^–Lab), entitled “A Review of Solar PV Benefit and Cost Studies.” This robust discussion document provides a critical framework for understanding the benefits and costs that increasing levels of distributed solar photovoltaics (DPV) on the electricity grid offers utilities, customers and technology developers.

A review of 15 leading assessments exploring the economic value of DPVs, the eLab study offers a foundation for accurately assessing the costs and values of distributed solar that can support smart policymaking and electricity pricing structures across the country.

“As the penetration of distributed solar continues to grow, it is vital to see it as an integral, fundamental part of the electricity system and not just as a ‘bolt-on’ solution,” said Lena Hansen, principal at RMI and co-author of the study. “Appropriately valuing solar PV and the other distributed energy services provided by every actor in the energy equation is part of this process of realignment.”

The increasingly rapid adoption of distributed energy resources—primarily DPV—is driving a heated debate about whether they create net value for the electric system due to their unique siting, operational and ownership characteristics compared to conventional centralized resources. Yet, while methods for identifying, assessing and quantifying the benefits and costs of distributed resources are advancing rapidly, important gaps need to be addressed before these methods can provide an adequate foundation for policymakers and regulators engaged in determining levels of incentives, fees, and pricing structures.

“Understanding the costs and benefits of distributed generation is the most significant issue facing the energy industry in our generation,” said Federal Energy Regulatory Commission Chairman Jon Wellinghoff. “Balancing the cost and benefit equation will determine whether consumers pay reasonable costs for new energy infrastructure development or pay for costs that may be unnecessary and wasteful.”

Today, the wide variation in analysis and quantitative tools used by different parties in different jurisdictions is inconsistent, confusing and frequently lacks transparency. And, while individual regions must adapt approaches based on their local context, greater standardization of categories, definitions and methodologies is possible.

“Deciphering the costs and benefits of distributed energy services is critical to ensure better technical integration and economic optimization.” said Virginia Lacy, RMI senior consultant and co-author of the study. “As the penetration of DPV and other customer-sited resources increases, accurate pricing and market signals can help align stakeholder goals, minimize total system cost, and maximize total net value.”

About RMI
Rocky Mountain Institute is an independent, entrepreneurial, nonprofit think-and-do tank with offices in Snowmass and Boulder, Colorado. RMI emphasizes integrative design, advanced technologies, and mindful markets in fulfilling its mission to drive the efficient and restorative use of resources. RMI’s strategic focus is to map and drive the U.S. transition from fossil fuels to efficiency and renewables by 2050. Please visit http://www.rmi.org for more information.

About eLab
The Electricity Innovation Lab (e-Lab) brings together thought leaders and decision makers from across the U.S. electricity sector to address critical institutional, regulatory, business, economic, and technical barriers to the economic deployment of distributed resources. A multi-year “change lab,” e-Lab regularly convenes its members to identify, test, and spread practical solutions to the challenges inherent in these questions. e-Lab is a joint collaboration, not a consensus organization, convened by RMI, with participation from stakeholders across the electricity industry.

July 27, 2013 0 comment