How a transparent, modern grid properly values solar, DER

grid modernization with solar

Much of our Attack the Tariff campaign is focused on market-based innovations that improve the upfront costs and long-term value for a variety of solar projects. But state-based solutions and local movements often make the biggest impact. In a series of white papers this year, the Solar Energy Industries Association (SEIA) made a solid case for how regulators and utilities could lay the ground work for a more modern-day grid that takes better advantage of distributed energy resources.

“When states develop fair compensation mechanisms for distributed energy resources (DER), the result is a modern electric grid that better serves the needs of all its customers,” said Sean Gallagher, SEIA’s vice president of state affairs. “The case studies highlighted in our report can serve as a model for other states interested in grid modernization and the economic benefits that result.”

We recommend reading the whole thing. Our big takeaway is just how imperative it is for utilities to be more transparent with their data, forecasts and calculations. We need to get more voices in the room to offer solutions. What locations in an area need which specific upgrades? For what time of year? For what time of day?

Transparency

We all already know utility transparency is an issue, but when the possibilities for grid modernization are laid out as SEIA has done in this series, the lack of transparency seems more inexcusable than ever.

Our favorite concept from the report came in part four, Getting More Granular: How Value of Location and Time May Change Compensation for Distributed Energy Resources.

Locational value can be used to guide resources to high value locations. Utilities can create, and should publish maps showing the specific locations of any needs on the distribution system, the specific grid constraints to avoid the need (e.g., high loads during hot late summer afternoons), and the value of the avoidance in terms of dollars per amount of capacity. If a developer knows in advance that there will be a utility solicitation for the identified needs, it can begin seeking customers or project sites in anticipation of the opportunity to bid in its projects.

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The report continues in that section to lay out a basis for compensation:

In addition to competitive utility solicitations, there are alternative means of providing targeted tariffs, programs or incentives to drive DER to locations to meet identified needs. If identified needs are too small or have too short of a lead time to be met through a competitive solicitation, the utility could have a tariff- or program-based mechanism that can step in on short notice.

For example, voltage issues are often very isolated and managed with small utility investments. However, smart inverters are increasingly being deployed widely and can be used to provide voltage management services in the locations where a utility has challenges managing voltage within an acceptable range.

In addition, tariffs enable customers of all stripes to adopt solar and other DER, which delivers the generalized grid benefits we discuss, but also ensures that a state’s clean energy market grows equitably in a manner that distributes the social, environmental, and economic benefits to all ratepayers. This is an emerging topic and it is expected that California’s Integrated Distributed Energy Resources proceeding will explore non-solicitation based sourcing mechanisms.

So, there needs to be more transparency for developers and engineers to jump in and propose solutions, but there also needs to be more general transparency for the public to better understand how electricity gets to their house, what exactly it costs, and what alternatives could look like. Each small decision is super complicated, but zooming back out and considering the broad strokes from the point of view of an actual home owner would be revealing.

Changing incentives

In part five, which considers DER and non-wires solutions, SEIA makes the case that enhanced distribution system planning should incorporate the following key features:

• DER growth scenarios to inform grid planners where organic DER growth can be expected and where incremental DER deployment is needed.
• Hosting capacity analyses to determine DER hosting capacity limits on the distribution system to inform grid planners where additional investments may be needed to enable higher penetrations of DER.
• A methodology for fully valuing distributed energy resources to ensure proper price signals
• A transparent evaluation process by which NWS can be measured against traditional utility investments to determine the best investment for ratepayers.

Distribution utilities often make money on the construction of substations and other major capital projects. By avoiding those expenditures with solar or other DER, utilities would lose revenue opportunities, which is obviously a disincentive. This is why in California and New York, both states leading the way into a new era of transparency and collaboration, regulators have created compensation mechanisms to remove this potential bias.

This approach has allowed Southern California Edison to acquire about 260 MW of location-specific DER, 50 MW of which is distributed solar. In New York, the Public Service Commission agreed to defer the construction of a $1.5 billion substation, instead having Con Ed meet the forecasted load with 17 MW of customer-sided solutions and 52 MW of non-traditional utility-sided solutions by mid-2018. The overall budget here was only $200 million, of which only about $69 million was spent. The remaining money will be used to defer additional investments.

Bottom line, this series illustrates that if you started the grid from scratch in 2018, knowing what we know, and with the technology we have, there is just no way you’d arrive at the current arrangement and business model. Having utilities prioritize DER with the same long-term, capital intensive strategizing that they current apply, could be the most impactful U.S. innovation this century.

— Solar Builder magazine

Solar was more than half of all U.S. electricity capacity added in Q1 — here’s how it happened

U.S. solar electric capacity

Showing resiliency in spite of the new tariffs on imported modules, the U.S. solar market added 2.5 gigawatts of solar PV in the first quarter of the year, representing annual growth of 13 percent (and a 37% quarter-over-quarter decrease), according to the latest U.S. Solar Market Insight Report from GTM Research and the Solar Energy Industries Association (SEIA).

Solar PV accounted for 55 percent of all U.S. electricity capacity added during the quarter and added more than two gigawatts for the 10th straight quarter, the study said.

Overall, the report estimates that solar’s growth in 2018 will mirror 2017’s 10.6 GW before growing more robustly in 2019 and then accelerating in the early 2020s.

FIGURE: New U.S. Electricity Generating Capacity Additions, 2010-Q1 2018

GTM solar energy market insight

Source: GTM Research / SEIA U.S. Solar Market Insight, Q2 2018.

“The solar industry had a strong showing in the first quarter,” said SEIA President and CEO Abigail Ross Hopper. “This data shows that solar has become a common-sense option for much of the U.S. and is too strong to be set back for long, even in light of the tariffs. States from California to Florida have stepped up with smart policies that will drive investment for years to come.”

According to the report, the solar industry installed 1.4 gigawatts of utility-scale PV in Q1, the 10th consecutive gigawatt-scale quarter for the U.S.’s largest solar market segment.

RELATED: Install more solar with our Attack the Tariff tips

Will this sustain?

GTM Research said utility-scale solar projects thus far have been relatively insulated from tariffs but analysts expect the tariffs to have a bigger impact on the segment in 2019. However, they forecast growth for the market. The report increased the forecast for utility-scale solar to 6.6 GW in 2018. That’s slightly higher than the 6.47 GW predicted in March.

While voluntary procurement by utilities is the largest driver of utility-scale PV, corporate procurement/offsite commercial and industrial now accounts for 2.0 GWdc, or 10%, of projects in development.

Non-residential continues to rise

Coming off its largest quarter ever, non-residential PV fell 34% quarter-over-quarter, despite posting 23% year-over-year growth. But the non-residential segment still posted its fourth-highest installation total ever, with 509 megawatts installed. Regulatory demand pull-in from looming policy deadlines in California and the Northeast is a leading growth factor.

The other growth silo is community solar. Minnesota alone added more than 100 MW of community solar in Q1. The report says the U.S. has now surpassed 1 cumulative GW of community solar capacity.

Residential stays flat

New additions of residential PV remained flat quarter-over-quarter and year-over-year in Q1 2018, following a 15 percent contraction in 2017.

“This is a promising indicator that constraints to residential PV growth like segment-wide customer acquisition challenges and national installer pullback are abating,” GTM Senior Analyst Austin Perea said. “However, these problems are not entirely solved, as we’re seeing slowdowns in states with a relatively high penetration of PV installations.”

The report notes that three of the top five residential solar markets in 2017 — Maryland, New Jersey, and New York — are expected to contract in 2018 for a second consecutive year as a function of the persistent customer-acquisition challenges.

“The decline in some major state markets will be offset by growth in emerging markets,” Perea said.

Florida having its moment

GTM Research and SEIA highlighted Florida as a standout state in this quarter’s edition of the report. Florida added more solar than it did in all of 2016, the second most capacity after California and the first time ever that it was ranked among the top 5 for quarterly installations.

Forecast brightens a bit

GTM Research anticipates the U.S. market in aggregate will be flat this year. The U.S. market can again expect to see growth exceeding 10 percent in the early 2020s, driven in part by California’s recently announced policy requiring solar on all new homes. The report forecasts that within five years, California’s new home solar market alone will be larger than the No. 2 state residential solar market, New Jersey, by 100 MW.

Total installed U.S. PV capacity is expected to more than double over the next five years. By 2023, more than 14 GW of solar will be installed annually.

Download the report’s free executive summary here.

— Solar Builder magazine

Solar was more than half of all U.S. electricity capacity added in Q1 — here’s how it happened

U.S. solar electric capacity

Showing resiliency in spite of the new tariffs on imported modules, the U.S. solar market added 2.5 gigawatts of solar PV in the first quarter of the year, representing annual growth of 13 percent (and a 37% quarter-over-quarter decrease), according to the latest U.S. Solar Market Insight Report from GTM Research and the Solar Energy Industries Association (SEIA).

Solar PV accounted for 55 percent of all U.S. electricity capacity added during the quarter and added more than two gigawatts for the 10th straight quarter, the study said.

Overall, the report estimates that solar’s growth in 2018 will mirror 2017’s 10.6 GW before growing more robustly in 2019 and then accelerating in the early 2020s.

FIGURE: New U.S. Electricity Generating Capacity Additions, 2010-Q1 2018

GTM solar energy market insight

Source: GTM Research / SEIA U.S. Solar Market Insight, Q2 2018.

“The solar industry had a strong showing in the first quarter,” said SEIA President and CEO Abigail Ross Hopper. “This data shows that solar has become a common-sense option for much of the U.S. and is too strong to be set back for long, even in light of the tariffs. States from California to Florida have stepped up with smart policies that will drive investment for years to come.”

According to the report, the solar industry installed 1.4 gigawatts of utility-scale PV in Q1, the 10th consecutive gigawatt-scale quarter for the U.S.’s largest solar market segment.

RELATED: Install more solar with our Attack the Tariff tips

Will this sustain?

GTM Research said utility-scale solar projects thus far have been relatively insulated from tariffs but analysts expect the tariffs to have a bigger impact on the segment in 2019. However, they forecast growth for the market. The report increased the forecast for utility-scale solar to 6.6 GW in 2018. That’s slightly higher than the 6.47 GW predicted in March.

While voluntary procurement by utilities is the largest driver of utility-scale PV, corporate procurement/offsite commercial and industrial now accounts for 2.0 GWdc, or 10%, of projects in development.

Non-residential continues to rise

Coming off its largest quarter ever, non-residential PV fell 34% quarter-over-quarter, despite posting 23% year-over-year growth. But the non-residential segment still posted its fourth-highest installation total ever, with 509 megawatts installed. Regulatory demand pull-in from looming policy deadlines in California and the Northeast is a leading growth factor.

The other growth silo is community solar. Minnesota alone added more than 100 MW of community solar in Q1. The report says the U.S. has now surpassed 1 cumulative GW of community solar capacity.

Residential stays flat

New additions of residential PV remained flat quarter-over-quarter and year-over-year in Q1 2018, following a 15 percent contraction in 2017.

“This is a promising indicator that constraints to residential PV growth like segment-wide customer acquisition challenges and national installer pullback are abating,” GTM Senior Analyst Austin Perea said. “However, these problems are not entirely solved, as we’re seeing slowdowns in states with a relatively high penetration of PV installations.”

The report notes that three of the top five residential solar markets in 2017 — Maryland, New Jersey, and New York — are expected to contract in 2018 for a second consecutive year as a function of the persistent customer-acquisition challenges.

“The decline in some major state markets will be offset by growth in emerging markets,” Perea said.

Florida having its moment

GTM Research and SEIA highlighted Florida as a standout state in this quarter’s edition of the report. Florida added more solar than it did in all of 2016, the second most capacity after California and the first time ever that it was ranked among the top 5 for quarterly installations.

Forecast brightens a bit

GTM Research anticipates the U.S. market in aggregate will be flat this year. The U.S. market can again expect to see growth exceeding 10 percent in the early 2020s, driven in part by California’s recently announced policy requiring solar on all new homes. The report forecasts that within five years, California’s new home solar market alone will be larger than the No. 2 state residential solar market, New Jersey, by 100 MW.

Total installed U.S. PV capacity is expected to more than double over the next five years. By 2023, more than 14 GW of solar will be installed annually.

Download the report’s free executive summary here.

— Solar Builder magazine

Hawaii reforms utility incentive structure to focus on ratepayer benefits

hawaii solar utilities

Hawaii is reforming the old timey model for how investor-owned electric utilities get paid. Thanks to Governor David Ige signing SB 2939, future utility revenues — in the form of performance incentives or penalties — will be linked to performance metrics. This includes incentives for Hawaiian utilities to connect more customer-sited solar and battery systems.

“This is an important step forward to align the design of our electricity system with the needs of the public,” said Robert Harris, Director of Public Policy at Sunrun. “This new law breaks the direct link between revenues and utility investments in infrastructure,meaning Hawaii’s electric utilities no longer make more money just by spending more. ”

In passing the bill, the Hawaii State Legislature voiced concern about the high cost proposed to modernize the electric grid. Because of misalignment in the way electric utilities get paid, the Legislature was concerned utilities would have “a bias toward expending utility capital on utility-owned projects that may displace more efficient or cost-effective options, such as distributed energy resources owned by customers . . .”

RELATED: Our big takeaway from SEIA’s latest Grid Modernization report: Utilities need to step up

“This bill is a big win for local consumers who will pay less for better electric service with more options for home solar and batteries, and it is a responsible step forward helping utilities transition to a sustainable business model that can survive disruption in the energy sector,” said Hawaii State Representative Chris Lee, Chair of the Committee on Energy and Environmental Protection.

“We need to better align the electric utility’s interests with the public’s interest,” said Anne Hoskins, Chief Policy Officer, Sunrun. “The future is going to be a more dynamic and customer-centered energy system, and we must ensure we maximize public benefit and meet broader economic and environmental goals.”

Sunrun recently published a report detailing recommendations to improve and maximize the public benefits of the United States’ energy system by placing the consumer at the center. With the passage of the Ratepayer Protection Act, Sunrun looks forward to working collaboratively with the utility and others in HI to advance a more reliable, clean and affordable energy system

“Other state Legislatures and Commissions should take notice of Hawaii’s efforts,” said Hoskins. “The time to make these changes is now, before billions of dollars are spent in rebuilding our outdated electrical networks. Rooftop solar and home batteries are allowing use to choose a system that maximizes public benefits, not utility shareholder profits. Let’s keep giving people the freedom to create a brighter future.”

— Solar Builder magazine

New Jersey solar expansion takes next steps through state legislature

New Jersey Senate

Bills that will expand clean energy capacity in New Jersey continue to work their way through the legislature. N.J. Assemblyman John McKeon’s A3723 was passed in the Assembly Appropriations Committee and Senator Bob Smith’s S2314 was passed in the Senate Budget and Appropriations Committee. The companion bills will stabilize and expand New Jersey’s renewable economy and help extend the cost-saving benefits of solar to more families, communities and businesses in the state.

Vote Solar, Earthjustice, the Coalition for Community Solar Access (CCSA), the Solar Energy Industries Association (SEIA) and Sunrun applauded the legislation to grow New Jersey’s renewable development, maintain more than 7,100 solar industry jobs, and expand the benefits of clean energy to more residents. Additionally, nearly 50 solar companies and industry associations sent a letter to Governor Murphy and Senate and General Assembly leadership yesterday strongly recommending they pass and sign this legislation into law.

RELATED: RMI report shows path for a 30-GW community solar market by 2020

What will this do?

The legislation will stabilize the solar market through 2021 by increasing the solar target, closing the current solar renewable energy credit trading program in an orderly way, reducing the overall cost of the current solar Renewable Portfolio Standard (RPS) by lowering the Solar Alternative Compliance Payment, and setting in motion a process for considering the next generation of solar incentives in the Garden State. The bill also increases the overall RPS to 50 percent by 2030, and will enable a community solar program, which will ensure that all New Jerseyans have access to solar energy. The community solar program will give consideration to residential customers, especially in multifamily buildings, and low-to-moderate income customers.

“S.2314 has the potential to expand solar access to low and moderate income residents of New Jersey and we are encouraged by the committee’s vote to advance this legislation to the floor,” said Luis Torres, Senior Legislative Representative for Earthjustice. “As the process moves forward, we will continue to work with the legislature, where possible, and the BPU, to advocate for the inclusion of strong parameters for projects authorized under this act to ensure equity and access for low and moderate income families.”

 

— Solar Builder magazine