A Standardized Approach to Distributed Solar Studies

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With distributed solar growing at a record pace, states nationwide are assessing the benefits and costs of this dynamic resource. The implications of these studies couldn’t be greater, as cornerstone policies such as net metering are on the line. To help guide those critical efforts, Vote Solar and the Solar Energy Industries Association hosted a webinar exploring the lessons learned and emerging best practices from the now substantial volume of studies evaluating the costs and benefits of distributed solar generation (DSG).

The webinar featured experts from Rocky Mountain Institute (RMI), Interstate Renewable Energy Council (IREC), and Rábago Energy Consulting. RMI shared finding from their recently released study entitled, “A Review of Solar PV Benefit and Cost Studies,” which reviews 16 DSG benefit/cost studies by utilities, national labs, and other organizations.

In reviewing the studies, RMI found that while there is some agreement on overall approach to estimating energy and capacity value, there was significantly less agreement on approach’s to estimating grid support services and other benefits including financial and security risk, environment, and social value. RMI pointed out on the webinar that there is still a need to develop a standardized set of ‘best practice’ methodologies to help ensure accountability and verifiability of benefit and cost estimates.

Rabago Energy Consulting and IREC discussed a forthcoming paper that offers regulators just that – a suggested methodological framework for benefit and cost studies going forward. IREC and Rabago stressed that while calculated values will differ from one utility to the next, the approach used to calculate the value of distributed solar generation should be uniform.

Specifically, IREC and Rabago Consulting discussed what they see as the key structural parameters that must be defined at the onset of a study process – from which discount rate to use, to whether the benefits of a solar energy are levelized over the useful life of that ‘asset.’ The authors of the paper then went into details on all the components that must be evaluated in a DSG benefit and cost study, offering methodical recommendations for each segment. Check back on the Vote Solar homepage soon for that full report.

Net metering and rate design based on proper valuation of DSG is a priority issue for Vote Solar and our allies. Here’s a rundown of some of the states that have us busiest protecting solar rights:

  • Arizona: In July, the state’s largest utility proposed a complete overhaul of the net metering program, based on what we consider to be faulty analysis. Read about Arizona Public Service’s proposal here. And if you live in Arizona, it’s not too late to take action to urge the Arizona Corporation commission to reject their unfair proposal.
  • California: The California Public Utilities commission will soon release an updated statewide evaluation of the benefits and costs of net metering. Crossborder Energy’s evaluation released last year showed that annual net metering provides over $92M in benefits. While we are waiting for the CPUC study to be finalized this fall, we are busy ensuring that utilities are stopped from passing harmful legislation to change rate design parameters for solar customers. To learn more contact Vote Solar’s Susannah Churchill at Susannah@votesolar.org.
  • Colorado: At the end of July, Colorado’s largest utility, Xcel Energy, released a proposal to treat net metering as a subsidy. You can read all the details here. Xcel’s net metering rollback proposal is based on a study done in-house at Xcel that we believe severely undervalues the benefits that distributed solar brings to Xcel’s grid. We consider Xcel’s study to still be in draft form, and are suggesting improvements to the PUC. If you live in Colorado, consider taking action and letting the PUC know that Xcel’s proposal should be tabled until the study underpinning the proposal is fully vetted by stakeholders.
  • Idaho: In July, we scored a victory in Idaho, where the state’s major utility, Idaho Power Company (IPCo) had set out to weaken its net metering program and otherwise penalize solar customers by changing their rates. The verdict came out July 3rd, and the Commission stood strong for Idaho’s rooftop solar customers. Read all the details here.
  • Louisiana: At the end of June, in a 3-2 vote, the Louisiana Public Service Commission (PSC) opposed a hostile motion to replace retail-to-retail net metering credit for a much lower avoided cost credit. Read the details of the Louisiana net metering decision here.
  • Minnesota: sweeping solar energy bill, which among other things requires the MN Department of Commerce to develop a statewide methodology for a Value of Solar Tariff (VOST). Vote Solar plans to be involved in that process, which kicks off on September 17th.
  • Nevada: This August the Public Utilities Commission of Nevada (PUCN) kicked off a legislatively required process to evaluate the benefits and costs of net metering. Vote Solar has submitted comments to the PUCN. For more details contact annie@votesolar.org.

All told there are more than 11 states either actively investigating the benefits and costs of DSG or are planning to do so in 2014. We expect that this list will only grow, and we hope that this webinar and the two reports offers regulators and stakeholders some helpful resources to ensure that any study undertaken accurately reflects the value of this unique and growing energy source.

The growing interest from utilities, regulators and other stakeholders in assessing the benefits of costs of DSG can be traced to the fact that distributed solar is growing by leaps and bounds as costs have come down. Distributed solar generation has fast become a mainstream option for consumers. Deutsche Bank estimates that over 500MW of residential systems were installed in 2012 alone, and analysts project that much of the growth in solar in the next few years will come from residential and commercial DSG projects.

This consumer-driven growth represents a marked change from the traditional centralized way of doing utility business. It’s clear that the American public wants this kind of control over their energy bills and energy sources. Utilities should be finding ways to meet that demand and move with their customers into the 21st century. And that all begins by properly understanding its value.

Vote Solar is a non-profit grassroots organization working to fight climate change and foster economic opportunity by bringing solar energy into the mainstream.

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About Author

Walter’s contributions to CleanTechies over the past 4 years have been instrumental in growing the publications social media channels via his ongoing editorial and data driven strategies. He is the founder and managing director of Sunflower Tax, a renewable energy tax and finance consultancy based in San Diego, California. Active in the San Diego clean technology community, participating in events sponsored by CleanTech San Diego, EcoTopics, and Cleantech Open San Diego, Walter has also been a presenter at numerous California Center for Sustainability (CCSE) programs. He currently serves as an adjunct professor at the University of San Diego School of Law where he teaches a course on energy taxation and policy.

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