NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.
Distributed Solar Policy and
Business Model Issues
Lori Bird, NREL
October 17, 2017
2
Overview
• Status and Growth of distributed PV in the U.S.
• Tariff Revisions to Address PV Growth
o Net Metering, Value of Solar, TOU Rates, Locational Value
• Community Solar
• Emerging Interconnection Practices o Processes to streamline interconnection
o Hosting capacity
• Aggregation of Distributed Resources
3
Distributed PV Continues to Grow in the U.S.
7,260
15,985
10,363
11,741
15,080
17,911
0
5000
10000
15000
20000
25000
2015 2016E 2017E 2018E 2019E 2020E
An
nu
al U
.S. P
V In
stal
lati
on
s (M
Wd
c)
Utility
Non-Residential
Residential
Annual U.S. PV Installations: Forecast by Market Segment 2016-2020
• Continued annual DG PV growth expected in 2018 and beyond • ~4GW in 2016 • ~8GW in 2020
• As PV continues to
decline in cost solar paired with storage is becoming cost effective
Source: GTM Research Q1 Solar Executive Briefing
4
U.S. Installation Breakdown
• The United States installed 2.0 GWDC of PV in Q1 2017—42.9 GWDC total. • The distributed PV growth has slowed this year as large integrators pursue profitability at the
expense of growth, customer acquisition challenges remain, the potential for increased tariffs on modules and cells.
• However, some growth driven by community solar programs and virtual net metering, as well as greater number of states developing active markets.
4
Source: GTM Research/SEIA: U.S. Solar Market Insight Q2 2017.
0,7 0,9 1,0
2,1
1,4 1,3 1,4
2,2
1,3 1,4 1,4
3,3
2,1 2,2
4,2
6,5
2,0
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
Q1 '13
Q2 '13
Q3 '13
Q4 '13
Q1 '14
Q2 '14
Q3 '14
Q4 '14
Q1 '15
Q2 '15
Q3 '15
Q4 '15
Q1 '16
Q2 '16
Q3 '16
Q4 '16
Q1 '17
Qu
arte
rly
PV
Inst
alle
d (
GW
DC)
U.S. PV Installations by Market Segment
Utility
Non-Residential
Residential
CA; 507
NC; 200
AZ; 168 MN; 140
ID; 132
Other; 896
U.S. PV Installations by State (MWDC), Q1 2017
5
4.526
1.131
860
831
617
446
408
270
212
202
1.810
0 1.000 2.000 3.000 4.000 5.000
California
New Jersey
Massachusetts
Arizona
New York
Maryland
Hawaii
Colorado
Connecticut
Nevada
Rest of U.S.
Distributed PV Installed Capacity, Top 10 States, as of May 2017 Megawatts (MWAC)
8.758
2.752
1.684
1.495
970
968
857
607
504
471
2.679
0 2.000 4.000 6.000 8.000 10.000
California
North Carolina
Arizona
Nevada
Texas
Georgia
Utah
New Jersey
New Mexico
Massachusetts
Rest of U.S.
Utility-Scale PV Installed Capacity, Top 10 States, as of May 2017 Megawatts (MWAC)
State Installations: Distributed vs. Utility Scale
• As of May 2017, 36.2 GWAC of solar was installed in the United States. • Of the 36.2 GW, 14.5 GW is distributed PV • Half of the top 10 states led in both the utility-scale and distributed sectors, while the
other states on the list had less diverse deployment – Six of the top 10 states with utility-scale PV were in the Southwest while 5 of the top
10 states with distributed PV were in Northeast.
Source: EIA, “Electric Power Monthly,” forms EIA-023, EIA-826, and EIA-861 (July 2017). Note: EIA monthly data for 2017 are not final. Additionally, smaller utilities report information to EIA on a yearly basis, and therefore, a certain amount of solar data has not yet been reported.
5
6
Solar as a Percentage of Total Generation
• Seven states produced more than 6.5% of total net generation from solar in in the first five months of 2017
• Another six states produced more than 2.5% of total net generation from solar. • Hawaii generates most of its energy from distributed PV, while North Carolina
generated the vast majority of its energy from utility-scale PV.
Source: EIA, “Electric Power Monthly,” forms EIA-023, EIA-826, and EIA-861 (February 2017). Note: EIA monthly data for 2017 are not final. Additionally, smaller utilities report information to EIA on a yearly basis, and therefore, a certain amount of solar data has not yet been reported. “Net Generation” includes DPV generation.
6
15,3%
11,4% 10,0% 9,7%
7,0% 6,5% 6,5%
4,5% 4,3% 3,8% 3,4% 3,1% 2,6% 1,9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Sola
r G
en
era
tio
n a
s a
Per
cen
tage
of
Tota
l N
et G
en
era
tio
n
CSP DPV UPV January—May 2017
Tariff and Net Metering Policy Revisions
8
Recent Activity on Net Metering and Solar Policy
40 States + DC took action on distributed
solar policy and rate design during Q1 2017
Source: “The 50 States of Solar: Q4 2016 & Annual Review Executive Summary .” NC Clean Energy Technology Center. http://www.dsireusa.org/resources/presentations-and-publications/
Policy Type # of Actions
% by Type
# of States
Residential fixed charge or minimum bill increase
71 33% 35 + DC
Net metering 73 34% 28
Solar valuation or net metering study
20 9% 16 + DC
Community solar 18 8% 13
Residential demand or solar charge
16 8% 10
Third-party ownership of solar
9 4% 8
Utility-led rooftop PV programs
5 2% 5
Total 212 100% 47 States + DC
Summary of Policy Actions
Q1 2017 action
No recent action
D
C
9
Options and Considerations for Regulators
• Net metering
• Two-way rates
o Value of solar
o Other export compensation
• Time-of-use rates
• Locational value
• Fixed charges
• Demand charges
• Minimum bill
• Ensuring sufficient revenues collected to maintain the grid
• Fair and equitable rates
• Customer choice
• Ensuring policy goals are achieved
• Level playing field for new technologies
• Competition and provision of customer services
Options for DG Tariffs Regulatory Considerations
10
Compensation Methods for Distributed PV
• Net energy metering retained in many jurisdictions o Customer credited at retail rate for all generation from the PV
system
• Valuation methodologies o Ex., New York value stack methodology o Ex., Minnesota value of solar methodology
• Exports compensated at a specified rate less than retail rate o E.g., Nevada law adopted in June 2017, compensates customers
at 95% of retail rates initially and decreasing to 75% of the retail rate over time
• Time of use (TOU) rates for PV customers o E.g., Required for all net metered PV customers in California;
Colorado initiated pilot program
• Self supply only, no grid exports o Hawaii also had a grid supply option but it is fully subscribed
energy.gov/sunshot
• States have developed systems other than net metering to compensate solar exported onto the grid
• States with a large deficit between retail and “exported” rates may provide incentive for storage/self-consumption
Comparison of Residential Solar Bill Credit
Mechanisms
Sources: Hawaii Public Utility Commission Docket 2014-0192; Hawaiian Electric Effective Rate Summary April 2015; Form EIA-861. EIA Statewide Avg. Electricity Prices (2013), MS PUC Docket No. 2011-AD-2. NREL (10/3/15), GTM (12/15/15), NV Energy.
0
5
10
15
20
25
30
Oahu (HI) Mississippi Minnesota California Nevada 2016 Nevada 2020
Ce
nts
/kW
h
Retail Rate "Export" Rate
Subsequently revised
11
12
California’s Net Metering 2.0 and TOU Rates
• NEM 2.0 successor tariff introduced in January 2016
• NEM 2.0 requires customer-generators to cover the costs for the services they obtain from the utility.
• The interconnection fee is levied on new NEM customer-generators and equal to the cost incurred by the utility to interconnect them
• Customer-generators to incur the non-bypassable charges on kWh from utility (2-3cents/kWh)
Source: “51st State Perspecitves: Distributed Energy Resources Integration.” Scott Madden Management Consultants and Smart Electric Power Alliance (SEPA). December 2016. http://www.scottmadden.com/wp-content/uploads/2016/12/SEPA-ScottMadden-51st-State-Report_DER-Integration-CA-NY.pdf
• Customers required to participate in TOU program
• NEM 2.0 to run until 2019 and then PUC will evaluate revisions to consider benefits of solar in different locations and times o Locational Net Benefit Analysis methods
underway
13
NY - Value Stack for DER Compensation
• “Value Stack” pricing mechanism designed to provide more accurate compensation levels for larger DER projects
• Initial 2-year tariff; phase 2 tariff development under way.
• Behind-the-meter solar would be credited at the full retail rate until 2020
• Value components (applied to hourly net exported generation o Energy value
o Installed capacity value
o Environmental value
o Locational System Relief Value (to be determined)
o Market Transition Credit (for value that cannot be quantified)
14
Determining Locational Value Adder
NY utilities determined “locational system relief value areas” DER systems in these areas receive adder to value stack CA has Locational Net Benefit Analysis underway to determine locational value
Source: ConEd
Community Solar
16
Community Solar (Shared-Solar)
• Customers participate in solar project not located on their property
• Customers receive some of the project’s power or financial benefits
• Varied ownership, management models o Utility, business, school, nonprofit
• Benefits: o Increase access to solar (for customers
without on-site access) o Deliver solar at a competitive price;
economies of scale with larger projects o Utility can play role in offering program
17
Why Community Solar?
There are many potential consumers of solar who are unable or don’t
want to install a PV system on their roof. • 49% of households are currently unable to host a PV system • 48% of businesses are unable to host a PV system
Why?
• Renters/lessees
• Condo owners
• Shaded or old roofs
• An entire system may be too costly
• Not allowed (HOA restrictions)
• Less than ideal roof orientation
• Low income customers Community Solar Projects and States with Supporting Policies
NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.
Interconnection Practices
20
• Expedited processing of interconnection applications o Fast track procedures for small systems or those that meet certain
screens
• Automation of application processes o Utilities updating software to manage higher volume of
applications o Online applications and more visibility to customer
• PV plus storage interconnection requirements • Utilities just starting to see more PV plus storage systems. • Need for standard processes and approaches for interconnection
• Hosting capacity mapping o Maps provide visibility of where systems are installed and where
the feeders can accommodate new capacity o Eventually can be used for expediting interconnection
Emerging Interconnection Practices
Electric Generation Interconnection 21
0
1
2
3
4
5
6
7
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M
2012 2013 2014 2015 2016
0
15
30
45
60
75
90
105
120
135
150
SNEM
Ap
plic
atio
ns
/ M
on
th
Milh
are
s
Cyc
le T
ime
(B
usi
ne
ss D
ays)
Median 90% 95% 99% Apps Rcvd
Rooftop Solar Interconnection Time
Compliance Requirement
PG&E has dramatically reduced both cycle times
and unit costs for Standard net metered systems
From Jan 2013 through Mar 2016
• Unit costs decreased by a factor of 10
• Resulting in ~$29M of administrative savings
Currently Permission to
Operate is issued within 3
Business Days for 90% of
completed applications
3
22
Three levels of sophistication:
• Restricted zones (where can’t I build a system?)
• Address-level search (can I build a system here?)
• Feeder mapping (where should I build a system?)
Interconnection Capacity and Mapping
“Good-bad-maybe” : Burlington Electric (VT), Green Mountain Power (VT), PSE&G (NJ)
23
• CA moving toward regular updates of hosting capacity maps
• Maps provide developers with more information about where to site projects
• Ultimately, maps and feeder-data could be used to further expedite the interconnection process
Interconnection Capacity and Mapping
Electrical Information: Orange and Rockland (NY), Southern California Edison (CA)
Distributed Resource Aggregation
25
Distributed Resource Aggregation
California ISO Distributed Energy Resource Provider (DERP) • Distributed energy resource aggregations (DERAs)
participate in the CAISO day-ahead, real-time and ancillary services markets as a participating generator
• Must meet a 0.5 MW minimum capacity requirement; individual DERs must be <1MW
• Aggregation up to 20 MW • https://www.caiso.com/participate/Pages/DistributedE
nergyResourceProvider/Default.aspx
26
Federal Regulation Enabling Aggregation
• Federal Energy Regulatory Commission (FERC) Notice of Proposed Rulemaking (NOPR) issued Dec 2016 addresses storage participation in wholesale markets and rules for aggregation of distributed energy resources
• FERC Order 745 required ISOs and RTOs to pay customer-side capacity resources (e.g., demand response) an equivalent value to what power plants/supply-side resources earn
• FERC Order 755 required ISOs to create programs to reward “fast-responding” resources such as batteries for frequency regulation
