Can Expanding Rooftop Solar Coexist with Traditional Electric Utilities?

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1 Can Expanding Rftp Slar Cexist with Traditinal Electric Utilities? Rbert M. Marglis Natinal Renewable Energy Labratry Presented at: GLF Electricity Seminar Schl f Advanced Internatinal Studies Jhns Hpkins University Washingtn, DC Nvember 12, 2013 NREL is a natinal labratry f the U.S. Department f Energy, Office f Energy Efficiency and Renewable Energy, perated by the Alliance fr Sustainable Energy, LLC.

2 EEI: Lw cst slar Vicius Cycle? Surce: Kind, P. (2013). Disruptive Challenges: Financial Implicatins and Strategic Respnses t a Changing Retail Electric Business. Edisn Electric Institute, Washingtn, D.C. 2

3 SunSht Envisins Dramatic Grwth Ttal Slar Capacity Under the Range f Cst Reductin Scenaris SunSht Targets GW, 505 TWh (11%) PV 28 GW, 137 TWh (3%) CSP Ttal: 14% f US demand GW, 1036 TWh (19%) PV 83 GW, 412 TWh (8%) CSP Ttal: 27% f US demand Widespread PV Adptin Under SunSht Scenari 2030 PV Capacity: 302 GW 2050 PV Capacity: 632 GW PV Capacity (GW) < > 50 Surce: DOE. (2012). SunSht Visin Study. U.S. Department f Energy, Washingtn, DC. ( 3

4 Or an pprtunity? On its face yu wuld lk at it and say distributed generatin is a threat. But n the ther hand we see it as an pprtunity because ur business is changing. There's n getting arund it." Nick Akins, chief executive f American Electric Pwer Recent examples f utilities investing in DG Slar Direct Energy and Crius Energy Trust frmed partnerships with SlarCity Edisn Internatinal, which wns SCE, bught SCre Energy (Aug 13) Edisn Internatinal, Duke Energy and tw ther utilities invest $42MM in Clean Pwer Finance (H1 13) Nextera acquired Smart Energy Capital (May 13) Surces: BNEF (09/11/13); Cleantech Finance (07/03/13), 09/23/13); Frbes (08/13/13); Greentech Media (05/16/13); Wall Street Jurnal (05/28/13). 4

5 Ptential Utility Slar Business Mdels Utility Build-Own-Operate The utility earns a return n DG slar assets and gain revenues frm the sale f the electricity generated. Utility-led Cmmunity Slar Prjects Utility wns slar asset r purchases prductin thrugh PPA and sells slar capacity r electricity t a grup f custmers. Utility Partnership and Investments in 3rd-Party Leasing Partner with r invest in a third-party leasing cmpany that supplies slar systems t the utility s custmers. Value Added Cnsulting Services Sme utilities already ffer cnsulting services fr energy efficiency; these services culd be expanded t distributed generatin and demand-side management ptins. Virtual Pwer Plant Operatr Utility aggregates the generatin frm many distributed units n its system. The Energy Services Utility Utility pricing is nt based n the amunt f energy prvided, but n the value f services prvided. Surces: Regulatry Cnsideratins Assciated with the Expanded Adptin f Distributed Slar (Discussin Draft), prepared by L. Bird, J. Heeter, and J. McLaren f NREL and C. Linvill, J. Migden-Ostrander, R. Sedan, and J. Shent f the Regulatry Assistance Prject fr a July 19, 2013 wrkshp at NREL 5

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7 Net Metering Debate Califrnia AB 327 signed by gvernr in Octber 13 Net metering extended t 2017 (frm 2014). Califrnia Public Utility Cmmissin (CPUC) must design new standard cntract by 2015 which des nt shift cst t nn-net metered custmers 5% net metering cap nw explicit but CPUC can raise it Utilities can nw charge a fixed fee fr slar up t $10/mnth Rate tiers reduced frm 5 t 2 tiers highest tw tiers (which typically ffset slar) will see rates decrease MN law requiring PUC t develp value f slar tariff by Jan Must take int accunt 1) value f energy 2) generatin capacity 3) transmissin capacity 4) reduced transmissin and distributin lsses 5) and envirnmental benefits. Guaranteed t be at r abve retail fr first three years Arizna Public Service (APS) applied t revise the state net metering prgram in July 2013, arguing it shifts csts t nn-slar custmers In Octber Arizna Crpratin Cmmissin (utility regulatr) staff experts recmmended that the cmmissin nt apprve APS prpsal 7

8 Net Metering Debate (cnt) Texas - Austin Intrduced value f slar feed-in-tariff in 2012 at $0.128/kWh higher than the ~$0.09/kWh retail rate Tariff will be recalculated each year and will likely g dwn ver time Austin Energy requires 200 MW f PV be installed by 2020 Texas - San Antni (CPS Energy) Mved t replace net-metering in April 2013 with SunCredit feed-in-tariff, hwever rate was prpsed at $0.056/kWh lwer than the ~$0.08/kWh retail rate Stakehlder backlash has put prgram n hld until further review in 2014 CPS Energy requires 100 MW f PV be installed by 2020 Clrad - Xcel Energy Xcel Energy prpsed increasing csts t net-metering custmers by charging them a kwh and fixed fee 8