April 2013 PV SOLAR RESOURCE GUIDE FOR RURAL DISTRIBUTORS IN TN Asa Roy
Introduction The following is paper is designed to be a resource for rural utilities in Tennessee that may not have experience with solar power. Research and interviews with the Tennessee s Green Power Providers Program, Green Power Providers Coordinators at several urban distributors, and solar installers in Tennessee helped provide background and other information that has been incorporated into the results and recommendations. This resource focuses on photovoltaic solar conversion and outlines the basic science of photovoltaic technology and how it is connected to the electric power grid. Statistics of solar power use around the world, throughout the country, and in Tennessee, are presented to demonstrate that solar power is a quickly growing market. Finally, TVA s several renewable energy programs and the distributor s role in each are discussed and summarized. Table of Contents Solar Technology Basics... 2 Photovoltaic Cell Technology... 2 Solar Array Requirements... 2 Solar Array Installations and Connections... 3 Solar Power Use... 4 Solar Power Use Worldwide... 4 Solar Power Use in the US... 4 Solar Power Use in Tennessee... 5 Solar Power Cost... 7 Solar Price History... 7 Subsidies... 8 TVA Renewable Energy Programs... 9 Overview... 9 Green Power Providers... 10 Renewable Standard Offer... 13 Solar Solution Initiative... 13 Summary... 14 References... 15 Appendix: Resources on Solar Power... 15 Nationwide... 15 Tennessee... 16 1
I. Solar Technology Basics A. Photovoltaic Cells All solar panels are based on photovoltaic materials. There are other methods of harvesting the suns energy; however, photovoltaic technology is currently the most widely used. Photovoltaic (PV) cells are constructed of special materials called semiconductors that react with sunlight to produce electricity. Historically silicon has been the most common material used as this semiconductor. A diagram of a simple PV cell is shown below. Figure 1: Diagram of the components of a solar photovoltaic cell. (a) Front Contact (b) n-type Semiconductor (c) p- n Junction (d) p-type Semiconductor (e) Back Contact When sunlight hits the solar panel it travels through the material until it reaches the p-n junction, (c), where the sunlight reacts with the material resulting in an electron being freed from the material, represented by in the diagram above. This freed electron leaves behind an electron hole, represented by. The p-type semiconductor, (d), transports the electron holes downward to the bottom contact (e). The n-type semiconductor, (b), transports the freed electron to the top contact, (a), where the electrons are collect and flow out of the cell. The flow of electrons is used to power devices and then returned into the PV cell through the bottom contact, where the electrons recombine with the holes. In a solar panel many cells are connected together in series to produce larger amounts of electricity. A typical solar panel has a peak power rating of 200W and is around 18 square feet. Solar panels can be connected together in either series or parallel, depending upon the voltage and current requirements, into solar arrays. B. Solar Array Requirements Solar arrays produce the most electricity when they directly face the sun, so, in the northern hemisphere, solar arrays should face south. The height of the sun in the sky, referred to as the sun s altitude angle also changes throughout the year; therefore solar panels work best throughout the year when inclined at an optimal angle. In Tennessee an angle of 30 will provide optimized production year round. Solar arrays can also be equipped with a motor, allowing them to track the movement of the sun throughout the day and year. 2
Latitude, climate, and geography impact the amount of solar energy that reaches the ground. Insolation is the term used to describe how of the suns energy a given area receives during a given time. A map of insolation values throughout the US is shown below. Figure 2: Solar insolation map of United Sates. Source: National Renewable Energy Laboratory(NREL) The areas shown in red receive the most energy from the sun while the blue areas receive the least. Solar arrays in the southwest US would produce the most electricity, and show a greater return on investment. Tennessee has an insolation value of around 0.4 kwh per square foot per day, which is average for the US and higher than countries with considerable installed solar energy capacity such as Germany. So, Tennessee is a good candidate for solar, but it will not get the same return on investment as in the southwest. C. Solar Array Installations and Connections Solar arrays can be mounted on rooftops (typical for residential and commercial systems) or on ground arrays (typical for large scale systems). The electricity that flows out of a solar panel is direct current. Therefore, an inverter is necessary to convert the electricity to alternating current in order to be compatible with the grid. For safety reasons a disconnect switch must be placed on both sides of the inverter in case repairs must be made to the grid or solar panels. In order to participate in TVAs Green Power Providers program customers must have two meters, the existing meter for used to measure the customer s energy consumption and a new Smart Sync meter for measuring the solar arrays generation. A diagram detailing this set up is shown below. 3
Figure 3: Diagram of rooftop solar photovoltaic connections and required equipment in TVA region II. Solar Power Use A. Solar Power Use Worldwide In 2011 the worldwide capacity of installed solar was nearly 70 GW, equating to roughly 1.3% of the worldwide total generation capacity (BP & Science News). The installed capacity of solar power over the past decade is shown below. Figure 4: Worldwide installed solar capacity (1996-2011). Source: BP Statistical Review of World Energy (June 2012) As can be seen from the chart, the capacity of solar has been increasing exponentially in recent years. In Europe, high electricity prices combined with government subsidies strongly support the adoption of solar compared to other parts of the world. This has led to significant price decreases in solar technologies due to increasing economies of scale. B. Solar Power Use in the US The United States boasts low electricity prices compared to other western countries. While this is a benefit to US citizens and industries it presents a hindrance to the adoption of more expensive renewable technologies. Despite this, implementation of solar power has 4
increased exponentially in the past few years as the cost of solar decreases and approaches that of traditional sources of electricity. Figure 5: US installed solar capacity (2000-2012). Sources: SEIA/GTM US Solar Market Insight Report 2012 Year in Review & LBL Tracking the Sun V (2012) Solar projects can be divided into 3 categories; Residential, Commercial, and Utility. Residential systems are typically small scale (<10kW), while commercial and utility systems can be as large as several MW, or even larger. Despite this rapid growth, only 0.13% of the United States electricity generation capacity is from solar power (EIA). A breakdown of the solar installations in the US is shown below by number of systems (left) and capacity (right). The vast majority of systems installed in the US are small scale (<10kW); however these systems account for just over a quarter of the total solar generation capacity. Conversely, a small number of large scale systems (>100kW) account for over half of the total generation capacity in the United States. Figure 6: Breakdown of installed solar in United States by number of systems (left) and capacity (right). Source: LBL Tracking the Sun V (2012) C. Solar Power Use in TN In the US solar power use is increasing every year, and Tennessee is no exception. As shown in Figure 7 below the new solar installations in TN have grown rapidly in recent years. According to TVA, as of February 2013 there was a total installed solar capacity of 36.84 MW operating in TN. 5
Figure 7: New solar installations in TN by year (2000-2012). Source: NREL The Open PV Project (April 2013) A breakdown of new solar installations in the past decade is shown below. Nearly 2/3 of installations in TN are small scale residential systems, however these systems account for less than 10% of the generation capacity. Solar PV installations over 1MW account for less than 1% of installations but over 50% of the generation capacity. Figure 8: Breakdown of Installed Solar in TN by number of installations (left) and capacity (right). Source: NREL The Open PV Project (April 2013) A map of installed solar PV capacity in TN by zip code is shown below. Solar PV technology is widespread throughout TN; however less than a quarter of TN Zip codes have grid connected solar PV arrays. Figure 9: Installed solar capacity in TN by Zip Code. Source: NREL The Open PV Project (April 2013) 6
In the US alone the solar PV market is over $11.5 Billion (SEIA). Nationally the solar industry employs over 119,000 workers in 2012, and has increased employment by over 10% a year in recent years (TSF). Tennessee boasts a strong solar industry with nationally recognized installers and world class manufacturers. As of June 2012 there were 184 companies in Tennessee s value chain (TSI), and increased adoption of solar technology benefits both US and local economies. III. Solar Power Cost A. Solar Price History The cost of solar panels has decreased dramatically in recent years due to advanced technology and the flooding of the solar market with excess panels. At the same time the cost of installation has decreased as companies continue to gain experience become more efficient. This combination has led to a 40% reduction in the cost of solar installations in the past decade, making solar power more feasible and aiding the increased adoption of solar power in the US. Figure 10: Average installed cost of residential and commercial systems in the US (2000-2011). Source: LBL Tracking the Sun V (2012) The average price of large scale utility solar installations in the US during the 4 th quarter of 2012 was just over $2 per installed Watt. The estimated levelized cost of electricity generation for new systems coming online in 2018 is shown below for several sources. Solar PV remains more expensive than other conventional and emerging generation technologies. However, solar power offers certain benefits that other technologies don t, such as no emissions, low operation and maintenance requirements, no fuel costs, and stable electricity costs over the decades long life of solar systems also provide value to the owner. 7
Figure 11: Levelized cost of generation for systems coming online in 2018. Source: Institute for Energy Research (IER): Levelized Costs of New Electricity Generating Technologies (2013) B. Subsidies The US government offers a Federal Renewable Energy Tax credit for up to 30% of the cost of the total installed cost of solar arrays and other renewable technologies in order to foster growing industries and promote more widespread use. More information on this program can be found at: http://www.energystar.gov/index.cfm?c=tax_credits.tx_index. The Tennessee Valley Authority offers several programs which buy electricity from qualified renewable sources at favorable rates to support and encourage the use of solar power in the TVA service region. 8
IV. TVA Renewable Energy Programs A. Overview The Tennessee valley authority is committed to being a national leader in the generation of renewable energy. As such, TVA offers three programs to foster the production of solar power and other renewable technologies. These renewable energy programs are funded in part by the Green Power Switch program, which gives TVA s customers the option to buy blocks of electricity from renewable sources (wind, solar, and biogas). The customer is charged an extra $4 dollars on their monthly bill for each 150 kwh block of electricity purchased. This extra fee amounts to 2.6/kWh, or roughly a 25% increase in price of electricity. Select distributors in TVA s service area also offer a version of Green Power Switch called Pure Solar, in which the customer can purchase blocks of energy from GPP solar generation sites. Because it costs more to produce, Pure Solar blocks cost $8 per 50 kwh. This corresponds to 16/kWh, or a 160% increase in the price of electricity. Each of the three programs are summarized below and described in more detail in following sections. Green Power Providers program (GPP) evolved out of TVA s Generation Partners pilot program. The aim of GPP is to support residential and small commercial renewable energy systems (<50 kw). In 2012 the program had a capacity of 3 MW, an additional 9 MW was added in 2013. The Renewable Standard Offer (RSO) is a TVA program for intermediate to large scale renewable systems (50 kw-20 MW). The aim of RSO is promote the use of large scale renewable technology in TN by providing stability and long term contracts to developers. The program has a capacity of 100 MW for 2013. The Solar Solutions Initiative (SSI) is a TVA pilot program formed in 2012 to support the local solar industry in TN. This program is a subset of the RSO and is designed for mid size solar installations (50-1000 kw). In 2012 the total project capacity for SSI was 10 MW, an additional 10 MW was added in 2013. 9
B. Green Power Providers Generation Partners was a TVA pilot program formed in 2003 to support the development of small scale renewable energy projects in the TVA service region. Generation Partners was replaced by Green Power Providers in 2012. Distributors that participate in GPP may offer their customers the opportunity to apply to install small scale (<50 kw) renewable electricity generation source. GPP offers customers 20 year contracts in which TVA agrees to purchase all electricity generated from the renewable source. The GPP program has an annual limit to the total capacity of new systems which may be added. Once this limit is reached, TVA will stop accepting applications. TVA will also not accept applications during the month of December; new applications must wait until the beginning of the next calendar year for submission. In order to preserve the safety of the grid, TVA requires that all installers for solar projects must be certified through the North American Board Certified Energy Practitioners (NABCEP). Size limitations: Systems with a nameplate capacity of under 10kW are categorized as fast track, meaning these systems do not require energy use studies. Fast track projects are not limited by electricity consumption, so customers are eligible to apply for systems up to 10kW even if this would produce more energy than the customer consumes. Systems over 10 kw are subject to energy use requirements, meaning the total capacity is limited to the lower of (a) 50 kw or (b) the capacity that would produce the customer s historical energy usage. Example calculation for (b): Suppose a small business and wishes to install solar panels to offset its electricity consumption. Over the past year the business has used a total of 35,000 kwh. By dividing this by the number of hours in a year (8760) the average power usage of the site is obtained: The average power usage for the business is 4 kw. However, solar panels do not always generate electricity. TVA uses a capacity factor of 15% for solar panels; this means that averaged throughout the year the solar array generates only 15% of its nameplate capacity. To find the required size for the business solar array, we must divide 4 kw by 15%. This capacity is then rounded to the nearest whole number. Therefore the business is limited to a system with a nameplate capacity of 27 kw. A diagram of the GPP program application and installation process from the distributors perspective is shown below. 10
Figure 12: Flow chart of the GPP application process 11
Figure 13: Non-Fast Track solar installation process (for systems between 10 & 50 kw). Project Timeline: Once a customer submits the applicable paperwork and fees the distributor should attempt to either reject the application and send it back to the customer, or approve it and send it to TVA within 3-4 weeks. TVA strives to approve all applications within 30 days of submission. Once TVA approves the system the customer only has 180 days to order the system, get it installed and inspected, and have it interconnected to the grid. In order to meet this timeframe and avoid project delays, it is important for the distributor to order the Smart Sync meter once it is notified that the project was approved by TVA. Subsidy & Premium Rate: Once a system receives final approval from TVA the system owner is given a one-time subsidy of $1000 to help offset the costs of installation. For the first 10 years of the contract TVA agrees to purchase the generated electricity at retail rate plus a premium rate. For years 11-20 TVA will only purchase the generated electricity at retail rates. The premium rate is updated each year to reflect the current state of the renewable market. However, once the contract is completed the current premium rate is locked in for the term of the contract. In 2012 the solar premium rate was $0.12 per kwh, which was reduced to $0.09 in 2013. 12
Billing Options: Each distributor is required to choose between two different billing options for GPP. The options are the Distributor Billing Option and the TVA-Vendor Billing Option. Under the Distributor Billing Option the distributor is required to dispense the subsidy and generation credits to the customer. The distributor charges the site owner for the monthly electricity consumption at the site as normal. The distributor then applies a Generation Credit to the bill. The Generation Credit is determined by applying the retail and premium rate (if applicable) to the sites monthly generation. The distributor then sends the monthly power bill to the customer. If the Generation Credit exceeds the charges, meaning the distributor owes money to the customer, then the distributor has the option of rolling the credits over into the next months bill. This can be continued for 12 consecutive billing cycles. Under the TVA-Vendor Billing Option the distributor is not responsible for dispensing subsidy or the premium rate. The distributor determines the customer s monthly bill in the manner above, except the premium rate is not included in the calculation of the Generation Credit. The distributor must provide TVA with the generation data for the system during each billing period. TVA will then provide this information to a 3 rd party vendor who will apply the premium rate to the generation and dispense payment to the customer. The 3 rd party vendor is also responsible for dispensing the subsidy. C. Renewable Standard Offer TVA s Renewable Standard Offer (RSO) program was implemented to increase the use of renewable generation technologies in its service area. This program fosters the development of renewable technologies by offering 20 year contracts with pre-set pricing structures. All payments for energy generated are solely the responsibility of TVA, even if the energy is delivered through a distributor. The qualifying renewable technologies are: solar PV, wind, methane recovery, and direct firing or gasification of biomass from qualified sources. RSO projects must be larger than 50 kw, and less than 20 MW. The RSO has an annual capacity limit of 100 MW, of which no more than 50% can come from a single technology. RSO projects may connect directly to TVA s transmission system or to a distributor s system. Distributors are only involved in the process in the latter case. In this case the distributor is responsible for sharing any applicable information on applicants with TVA and overseeing interconnection of the system. D. Solar Solutions Initiative The Solar Solutions Initiative (SSI) is a two year pilot program started in 2012 that provides incentives for mid-size solar projects in the Tennessee Valley. SSI aims to support the existing solar industry in the region, and encourage further investment and job growth. As such only projects which use NABCEP certified installers who are located within TVA s service area are eligible to apply. 13
SSI is a subset of the RSO designed specifically for solar projects ranging from 50 kw to 1 MW. The program offers and $0.08/kWh premium rate on top of what is offered through the RSO for the first 10 years of the contract. In 2012 the program had a capacity limit of 10 MW, another 10 MW was added in 2013. Of this, no single individual or organization may apply for more than 2 MW. V. Summary Sections two and three of this paper highlight the importance of understanding TVA s green power programs. Each year in the US and around the world, the cost of solar power technology decreases and the use of solar power continue to increase. Solar power use in Tennessee is already widespread and the programs offered by the Tennessee Valley Authority ensure that it will continue to grow. For this reason it is important that distributors in TVA s service area, especially those with little experience with renewable energy, become familiar with the renewable energy programs offered by TVA in order to ensure the process runs smoothly for their customers. 14
References British Petroleum (BP): Statistical Review of World Energy. (June 2012). Accessed April 21, 2013. http://www.bp.com/sectionbodycopy.do?categoryid=7500&contentid=7068481 Science News: Global investment in renewable energy powers to record $257 billion. (June 11, 2012). Accessed April 21, 2013. http://esciencenews.com/articles/2012/06/11/global.investment.renewable.energy.powers.record. 257.billion Energy Information Administration (EIA): Existing Capacity by Energy Source, 2011 (Megawatts). (2013). Accessed April 25, 2013. http://www.eia.gov/electricity/annual/html/epa_04_03.html SEIA/GTM: US Solar Market Insight Report 2012 Year in Review. (March 14, 2013). Accessed April 20, 2013. http://www.seia.org/research-resources/us-solar-market-insight The Solar Foundation (TSF): National Solar Jobs Census 2012. (November 14, 2012). Accessed April 21, 2013. http://thesolarfoundation.org/sites/thesolarfoundation.org/files/tsf%20solar%20jobs%20censu s%202012%20final.pdf Tennessee Solar Institute (TSI): For-Profit Companies in Tennessee s Solar Value Chain Accessed. (June 6, 2012). April, 20 2013. http://solar.tennessee.edu/wp-content/uploads/tn-svc-060612.pdf Appendix: Solar Resources A. National Resources Solar Energy Industries Association (SEIA, www.seia.org) The SEIA is a national solar trade association that aims increase solar use through advocacy and education. Through partnerships with the industry the SEIA collects information about the solar industry from around the Nation. SEIA has a wealth of information about the state of the national solar market. The SEIA partnered with Green Tech Media (see below) uses this information to compile quarterly market insight press releases and an annual review full report. Archives from the past several years can be accessed at the link below. http://www.seia.org/research-resources/us-solar-market-insight Through contact with installers nationwide SEIA also maintains a national solar database of thousands of solar project which can be accessed through the link below. http://www.seia.org/research-resources/national-solar-database 15
Green Tech Media (GTM, www.greentechmedia.com) GTM is a media source that exclusively covers aspects of renewable energy sources, smart grid, and energy efficiency and strives to provide up to date information in these areas.. GTM is also heavily involved in research in these areas. In particular GTM provides research and analysis of the solar industry on a global scale. National Renewable Energy Laboratory (NREL, www.nrel.gov/) The NREL is a US Department of Energy national lab located in Colorado. The mission of NREL is to develop renewable energy and energy efficiency technologies and practices. NREL is a reliable source for information and analysis of solar photovoltaic technology. NREL heads a program called the Open PV project is collaboration between government the solar industry. The purpose is to create a comprehensive national database of solar photovoltaic installations. This data is freely available and can be used to analyze the US solar capacity by time, region, size and costs. This database is continuously updated and available year round, and can be found at the site below. www.openpv.nrel.gov/ Lawrence Berkley National Laboratory (LBL, www.lbl.gov/) The LBL is a Department of Energy National Laboratory located in California. LBL is a world class multidisciplinary laboratory focusing on a wide array of topics. LBL produces an annual report called Tracking the Sun. This publication compiles national data about solar photovoltaic system costs, capacities, and quantities. This information is freely available at the link below. emp.lbl.gov/publications/tracking-sun-v-historical-summary-installed-price-photovoltaicsunited-states-1998-2011 SunShot Initiative (http://www1.eere.energy.gov/solar/sunshot/about.html) The SunShot initiative is a Department of Energy project which seeks to make solar energy cost competitive by the end of the decade. The SunShot Initiative engages communities, utilities, universities, and the solar industry to achieve this goal. B. Tennessee Resources: Tennessee Solar Energy Industry Association (TenneSEIA, www.tenneseia.com/aboutus.html) TenneSEIA is the TN chapter of SEIA. Their mission is to make solar power mainstream in Tennessee. Tennessee Solar Energy Association (TSEA, www.tnsolarenergy.org) TSEA is a non-profit organization that is dedicated to educating the Tennessee population about the benefits of solar technology. TNSEA organizes events and maintains a database of helpful resources for solar in TN. 16
Tennessee Valley Authority Programs Links to TVA s renewable energy programs can be found below. Examples of applications and program guidelines can be found at each site. Renewable Standard Offer www.tva.com/renewablestandardoffer Solar Solutions Initiative www.tva.gov/renewablestandardoffer/ssi Green Power Providers www.tva.com/greenpowerswitch/providers Green Power Switch www.tva.com/greenpowerswitch 17