Distributed Solar: Joyce McLaren. Illinois Solar Energy Conference. July 16, Issues and Op4ons for U4li4es and Decision Makers

Transcription

1 Distributed Solar: Issues and Op4ons for U4li4es and Decision Makers Joyce McLaren Illinois Solar Energy Conference July 16, 2014 NREL is a na*onal laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

2 Na4onal Renewable Energy Laboratory The Na*onal Renewable Energy Laboratory (NREL) is the U.S. Department of Energy's primary na*onal laboratory for renewable energy and energy efficiency research and development. 2

3 Today s Topics Community Shared Solar Value of Solar Program Design Solar for EV Charging Other related on- going work: Distributed Solar for Resiliency Distributed Solar with Storage Let s stop for discussion aqer each topic 3

4 Community Solar

5 Ques4ons What is community shared solar? What are the benefits and challenges? What ac*ons are states taking? How do exis*ng policies impact community solar development? How can states create a policy environment that supports community solar development? 5

6 What is community shared solar? Community- based Solar Business Models Aggregated / Group Purchasing (e.g. Solarize ) Crowd- funded Solar (e.g. Mosaic) Shared Solar (e.g. Solar Gardens) aka Community Solar 6

7 What is community shared solar? Garfield County Community Solar project by Clean Energy Collec*ve Community shared solar projects allow par5cipants to buy or lease a por5on of a large distributed solar system and apply that solar genera5on toward their total demand on their electricity bill, just as if they had a solar system on their own roo:ops. 7

8 What are the benefits and challenges of shared solar? Reach a broader customer base 3/4 of residen*al rooqops are not suitable for solar 1 some interested homeowners lack financing Larger projects offer economies of scale Less costly than other solar incen4ve programs Can address the cross- subsidiza4on inherent in other incen4ve programs cost of program is not spread across all ratepayers all costs can be covered in par*cipa*on pricing structure cost of electricity integra*on and delivery can be deducted from bill credits Policy and regulatory barriers may exist that can increase project cost and risk 1 Denholm, P. and Margolis, R., Curves for RooQop Solar PV- Generated Electricity for the United States, Na*onal Renewable Energy Laboratory, TP- 6A November,

9 How do exis4ng policies impact development? Net metering o Virtual net metering Is virtual net metering allowed by state policy? Does language specify that net metered genera*on must serve on- site load? Some states have specifically allowed for virtually net metering through legisla*on: CA, DE, ME, MA, NH, VT o Net metering caps As caps are approached, uncertainty increases MA has a system of assurance for eligibility Which cap do shared solar projects count toward? o Limits to project size / par*cipa*on class Do net metering project size limits prohibit residen*al customers from net metering genera*on from larger projects? 9

10 How do exis4ng policies impact development? Federal Tax Incen4ve (Investment Tax Credit) IRS provided clarifica*on that shared solar projects are eligible 1 Federal Internal Revenue Code requires that systems have manufacturer cer*fica*on; but the criteria for cer*fica*on are defined at state level Ownership model determines who claims tax credit (owner, host or par*cipant) State Incen4ves Are shared solar projects eligible for state incen*ves directed toward residen*al market? Are state incen*ves taxable income? 1 Internal Revenue Service, No*ce

11 How do exis4ng policies impact development? Interconnec4on Policy Long processes/delays risk par*cipants loosing interest Can shared solar projects be fast- tracked? Is there a standard applica*on process? Renewable Energy Cer4ficates Is there a market for RECs generated by shared solar projects? Who will retain RECs generated by the project? 11

12 How do exis4ng policies impact development? Securi4es Compliance Avoid structures that would subject projects to securi*es regula*on. Obtaining a No Ac*on Lener 1 from SEC is *me consuming & costly Federal guidance and clarity is forthcoming Securi*es Exchange Act of 1934 preserves much of the states ac*ons with regards to securi*es States may need to provide addi*onal clarity 1 Securi*es Exchange Commission, Response of the Office of Chief Counsel, Division of Corpora*on Finance, Re: CommunitySun, LLC, Incoming lener dated August 29, 2011, hnp:// noac*on/2011/communitysun a1.htm 12

13 Community Solar Scenario Tool (CSST) Provides a first- cut analysis of the economics and program design op5ons for a poten5al shared solar project. Inputs System size Loca*on LCOE or PPA price O&M costs Number of blocks/shares Administra*on costs Electricity rates Federal or state incen*ves Bill credits or rebates to par*cipant Outputs Project economics from host and par*cipant perspec*ves Capacity- based vs. genera*on- based Total program costs Average monthly produc*on Upfront payment op*ons Monthly payment op*ons Predicted point of grid parity Community Solar Scenario Tool (CSST), Na*onal Renewable Energy Laboratory, Version 1, May 2014, hnp:// 13

14 Community Solar Scenario Tool (CSST) Quan4ta4ve project economics from the par4cipant and host perspec4ves. 14

15 Community Solar Scenario Tool (CSST) The cost of electricity to subscriber over project life4me, given inputs. 15

16 Ques4ons/Discussion

17 Value of Solar

18 Ques4ons What is Value of Solar? How does it differ from other mechanisms? What might solar markets look like: under different VOS tariff levels? in different loca*ons? with different federal/state incen*ves added? How do these differences affect how a VOS program is designed? What are the various program design op*ons? 18

19 What is a Value of Solar tariff? U"lity rate mechanism for compensa*ng generators of distributed solar power. Not intended to be an incen"ve or subsidy (although other incen*ves can be used in conjunc*on). Iden*fies the categories in which solar provides real value to the u*lity. Categories of value can include energy, emissions, T&D capacity, ancillary services, and other benefits. 1 1 For more informa*on on the categories of value and methodologies currently being discussed, please watch for a forthcoming NREL publica*on (Denholm and Margolis, 2014). 19

20 How is VOS different from other mechanisms? Net Metering Onsite genera*on offsets electricity purchased from the u*lity, at the grid rate (retail, wholesale or avoided cost) Solar customer banks excess genera*on as kilowan- hour (kwh) credit and uses it against future consump*on Feed- in Tariff Design calcula*ons ensure posi*ve rate of return for solar projects (i.e. cover costs), and most oqen ignore u*lity rates VOS Rate is based on the value of the genera*on to the u*lity, electricity system, and society, not the wholesale rate/retail rate/avoided cost Customer buys all power to meet their load from the u*lity U*lity buys all of the solar genera*on produced by the DG system (or u*lity may buy excess genera*on only at the VOS rate) 20

21 Value of Solar Program Design aggregate par*cipa*on limits addi*onal incen*ves transi*on away from net metering eligible customer classes eligible technologies We ve decided to implement Value of Solar. Now what? How do u5li5es and stakeholders build a VOS program that: supports distributed solar markets over 5me? is efficiently administered? maximizes the long- term goals that were intended? project sizes- payment frequency rate adjustments or recalcula*ons stakeholder communica*on contract period 21

22 Iden4fying Solar Markets under VOS tariff Cents/kWh VOS High Case VOS Medium Case VOS Low Case LCOE for PV Gap = Incen*ves needed to sustain solar market Loca*ons 22

23 Solar Markets under a VOS Tariff Cost Support Market LCOE- PV > VOS Tariff VOS rate is not sufficient to recover the life- cycle cost of PV installa*on. Incen*ves needed to fill the gap, in order to sustain solar market. Transi4onal Market LCOE- PV VOS Tariff VOS rate is nearly equal to the life- cycle cost of PV. Few incen*ves are needed to sustain the solar market. VOS program design needs reflect the shiq toward equaliza*on. Cost Compe44ve Market LCOE- PV VOS Tariff VOS rate is higher than the life- cycle cost of PV installa*ons. The market is self- sustaining. VOS program focuses away from providing economic support. 23

24 Program Design Categories Program design op"ons can be used to address differences in solar markets. Installa*on details Rate and contract treatment Addi*onal incen*ves/price supports Administra*ve issues 24

25 Installa4on Op4ons Category Eligible Par4cipants Individual project size Aggregate program size Technologies Suppor4ng Technologies or System Configura4ons Performance Interconnec4on Op4ons (Not mutually exclusive) Residen*al, Non- Residen*al, 3 rd party on customer sites, 3 rd party on brownfield or greenfield sites No limit, Sized by customer or par*cipant type, Expected genera*on rela*ve to historical customer use, Solar capacity rela*ve to historical customer peak load No limits, Total program capacity, Annual budgetary expenditures, Rela*ve to u*lity demand or demand growth Flat panel photovoltaic, Concentra*ng photovoltaics, Solar sterling engines, Micro- CSP Smart inverter, Energy storage, Panel orienta*on, Tracking, Inverter ra*os No standards, Onsite inspec*ons, Eligible equipment lists, Equipment and/or labor warranty minimums, Installer cer*fica*on requirements Engineering and safety standards on the distribu*on grid are dis*nct from the VOS program, though *ghtly coordinated and communicated (unless they do not exist) 25

26 Rate and Contract Op4ons Category Number/Kind of Rates Future VOS Categories Adjustments over Time Time of Performance Loca4onal Differences Indirect Value Op4ons Contract Op4ons (Not mutually exclusive) Single or mul*ple, Bundled or unbundled Consider future new value or cost categories, calcula*on, management and transi*on Compensa*ng unbundled VOS categories at different points in *me Leveliza*on vs. annualiza*on of VOS rate in the customer transac*on Frequency of recalcula*ng the VOS rate, Length of contract Present value of the contract Time of day, Seasonal, Panel orienta*on, Fixed versus tracking capabili*es Single, system- wide price, Regional price varia*on based on u*lity costs or value (i.e., conges*on), Individual, types or categories of distribu*on feeder pricing Customer segments, Rate tariff types (demand, three- phase, etc.) Solar project size, Ownership type (customer, third- party, etc.) On- site loca*on (roof, ground, etc.) Various lengths (e.g. 1 year, 5 years, 20 years), Front- loading of payments 26

27 Incen4ve Op4ons Category Incen4ve Benchmark Op4ons (Not mutually exclusive) Pre- NEM Status Quo, LCOE- PV Plan for non- VOS market changes (federal or state policy) Aim for transparency and predictability with lead *mes Incen4ve reduc4ons Reduce incen*ves based on achieving a certain LCOE- PV, installed capacity, installed price, known *me periods Reduc*ons in percentage, whole number or other bases Adjustments can be made on pre- determined schedule or certain number of days following event (announcement, approval, etc.) Incen4ve differen4a4on Project size Customer segment 27

28 Administra4ve Op4ons Issue Op4ons (Not mutually exclusive) Contracts and Materials need to be developed Transi4on Plan Accoun4ng Stakeholder Engagement Create communica*ons plan to serve varying audiences VOS program can be implemented immediately or over *me, poten*ally in parallel with the NEM program on a transi*onal or permanent basis Administra*ve costs are likely to be spread across all ratepayers barring precedent or regulatory decisions otherwise Interconnec*on and metering costs can follow exis*ng alloca*on prac*ces, unless there are material changes in requirements, process and costs Stakeholder interests across the u*lity, solar industry, and regulatory communi*es will be different and should be assessed Engaging openly and early during the VOS program design process will ensure transparency 28

29 Balance accuracy with simplicity of design Accuracy Benefit Theore*cal Needs Exac*ng Complexity Independent Decisions Prac*cal Capabili*es Close- Enough Simplicity Collabora*ve Feedback What level of complexity is the VOS program implementer equipped to manage? Will added complexity actually lead to more sa*sfactory results or equivalent benefits? 29

30 Key VOS Program Design Themes Based on VOS programs to date, a number of key themes have emerged: Compensate the u*lity for the grid services it provides to distributed solar generators Recognize the value of solar to the u*lity system and/or society o Codify the values in the u*lity financial structures o Pay the project owner appropriately Limit program cost to customers, both solar and non- solar o Avoid doing solar at any cost Create transparency in: o VOS calcula*on methodology o Input assump*ons o Program updates/adjustments 30

31 Ques4ons/Discussion

32 Solar for EV Charging

33 Ques4ons What are the benefits and challenges of charging electric vehicles during the day*me? What are the benefits and challenges of combining distributed solar and EV charging technologies? What are the grid implica*ons? What are the policy and regulatory op*ons for incen*vizing the use of solar for EV charging? 33

34 What are the benefits and challenges of day4me charging? EV Charging at Night versus Day Pros Cons Night- 4me or Off- peak Charging Makes use of low- cost base load genera*on Few or limited balancing and capacity challenges Limits poten*al day- *me travel EV ownership requires investment in charging infrastructure at residence Mid- day or On- peak Charging Increased mileage and petroleum displacement poten*al Reduced driver anxiety Poten*al for increased EV adop*on Increased challenge to balance loads Capacity increases may be required Demand charges could be triggered Higher costs 34

35 Why combine DG solar and EV charging? Distributed solar and EV charging technologies face their own individual challenges. The variable nature of distributed solar technology creates challenges for grid integra*on at high penetra*ons. June 25th genera*on at my house The current high cost of baneries used in electric vehicles limits the economic viability of EVs and constrains the number of miles that can be driven on a single charge. 35

36 Why combine solar and EV charging? Uncontrolled EV Charging (No Solar) Charging aqer the morning commute causes a spike in load and increase in electricity system ramping rates Charging directly aqer the evening commute contributes to peak demand; requires increase in total capacity requirements 36

37 Why combine solar and EV charging? Controlled EV Charging (No Solar) Staggered charging can smooth demand spike caused by charging post morning commute (Requires more expensive smart- charging technology) AQer evening commute: Deferring charging un*l aqer the system peak period reduces the impact of post- work charging on (1) the amount of energy needed during peak (2) the length of the peak period (Does not reduce the maximum peak level, however, which occurs prior to 3pm) Restric*ng charging to non- peak hours limits the benefits of mid- day charging (increased range) 37

38 Why combine solar and EV charging? Uncontrolled EV Charging (With Solar) AQer morning commute: PV produc*on overlaps with demand from EV charging (but is not op*mally aligned) Spike in demand when EVs are charging and PV produc*on is s*ll ramping up EV charging may reduce the curtailment of PV genera*on in mid- morning hours at high PV penetra*ons 38

39 Why combine solar and EV charging? Controlled EV Charging (With Solar) Op*mal use of PV to smooth the load curve caused by day*me EV charging Less curtailment of PV genera*on Reduced need to keep thermal generators online to provide opera*ng reserves for PV genera*on Risk that vehicle will not be fully charged when needed 39

40 Why combine solar and EV charging? Combining solar PV with controlled EV charging results in a smoother net demand profile than can exist in the implementa5on of either technology alone. We are stronger together than we are alone. Walter Payton 40

41 Regulatory and Policy Op4ons for Co- loca4on Provide rebates for co- loca5on of EV charging and solar technologies; offer higher rebates when controlled charging is employed Design specific rate structures or bill credits for customers with EV + solar Allow u5li5es to count the EV charging load that is off- set by co- located solar as eligible under u5lity energy efficiency requirements; ra5onale: solar off- sets the EV load, ac5ng like an EE measure Streamline interconnec5on applica5ons for solar with EV charging Waive demand charges associated with increased demand from EV charging on days when the solar systems are not producing Iden5fy loca5ons on the grid where including solar with EV charging infrastructure can provide the greatest benefit; use targeted incen5ves in these loca5ons Give special recogni5on to companies that develop solar EV charging projects Provide unbiased informa5on to raise awareness of the benefits of combining solar and EV charging technologies and assist poten5al developers 41

42 Ques4ons? NREL is a na*onal laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.