Moving Solar Markets Forward
Moving Solar Markets Forward
This toolkit is designed to provide guidance and resources that will help customers, third party solar vendors, and non-utility solar program or project managers to engage and collaborate with electric utilities to accelerate solar deployment and derive maximum value from solar resources. To achieve these goals, it is necessary to understand how utilities operate, how they are regulated, what motivates them, and how distributed solar resources affect the utility. With that understanding in hand, all of the parties will be better able to collaborate in the pursuit of solutions that serve the interests of all affected stakeholders.
This Toolkit is a work in progress – we will be adding new resources as new ideas, techniques and success stories emerge. We want this toolkit to be as useful as possible and encourage you to let us know if there are specific resources you would find helpful!
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Electric utilities play a central role in modern society, yet many people are largely unaware of how they are structured, how they operate, and how they set prices for the essential services upon which we all depend. In addition, the average customer only vaguely understands the role of federal, state, and local governments in regulating. Here, we provide reference documents that explain in detail how utilities operate and how they are regulated. We also share a document that explains why utilities may be reluctant to support increased deployment of distributed solar (and other distributed energy resources). Customers and third parties wanting to invest in solar need to understand how utilities function and understand utility perspectives on solar.
In order to effectively collaborate with a utility, customers and third parties also need to understand how distributed solar systems affect the utility’s bottom line. In these respects, utilities are not all alike. The impacts of distributed solar can differ, and thus the utility’s willingness and ability to collaborate can differ, depending on whether the utility is a for-profit investor owned utility (IOU), or a not-for-profit municipal, public power, or cooperative utility. There can also be differences in impacts and motivation depending on whether the utility owns generation assets, and based on the status of wholesale and retail competition. A document summarizing and explaining these differences is included.
Understanding Differences in Utility Views Toward Solar
This document will explore how the utility’s ownership model and the presence/absence of competition affects its views on customer-owned or third party-owned solar.
Webinar: Distributed Energy Resources (DERs), Industry Structure and Regulatory Responses
This webinar (based on a full report) examines the question of what high levels of DERs will do to the natural monopoly characteristic of an electric distribution utility, and what this might mean for the ability of utilities to profitably attract the capital needed to maintain their networks.
|Primer||Electricity Regulation In the US: A Guide (2nd Edition)||This RAP publication offers a detailed reference on how electric utilities function and how they are regulated|
|Report||A Primer on Electric Utilities, Deregulation, and Restructuring of U.S. Electricity Markets||This primer from PNL was written for use by individuals with responsibility for the management of facilities that use energy, including energy managers, procurement staff, and managers with responsibility for facility operations and budgets. It offers an introduction to utility restructuring and competitive electricity markets.|
|White Paper||Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business||This white paper published by EEI examines the potential of PV and other distributed energy resources to threaten utility finances and recommends an immediate focus on revising utility tariff structures in order to eliminate cross subsidies and utility investor cost-recovery uncertainties.|
|Report||Treatment of Solar Generation in Electric Utility Resource Planning||This NREL report focuses on:
|Guide||Electricity Regulation in the US: A (Brief) Guide||This RAP guide provides an introduction to how the utility industry and regulatory commissions in the U.S. are structured, the fundamentals of rate regulation and the relationship between regulatory commissions and utilities.|
Utilities recover their costs, and in the case of IOUs earn returns on their investments, through the rates they charge for retail electricity service. Not surprisingly, this means that rate design issues are vitally important to utilities. On the other hand, the design of rates and the resulting prices will also determine whether a customer can save money and earn a return on their own investment in solar power. In this section, we offer several reference documents that explain some of the typical rate designs that apply to customers with solar systems, and how those rate designs can impact solar system feasibility. We also offer references that explain how certain rate designs can affect utility cost recovery, profits, and future prices. Some of these reference documents identify principles for rate design that could align the interests of customers, third parties, and utilities.
Ratemaking, Solar Value and Solar Net Energy Metering—A Primer
This SEPA paper provides an introduction to state utility regulation (particularly rate-setting) and principles that are considered during the valuation of incremental resource additions, specifically distributed solar resources. It is designed to ensure that stakeholders engaged in these conversations are more fully informed in those areas in order to have a common understanding of the lexicon used.
|Webinar||Cost Allocation – The Transition from Costs to Rates||This webinar provides an in-depth review of the transition from utility costs to rates, time-varying and dynamic rates, and net-metering and alternatives.|
|Report||Impact of Rate Design Alternatives on Residential Solar Customer Bills: Increased Fixed Charges, Minimum Bills and Demand-Based Rates||Utilities are increasingly considering alternative rates structures that are designed to recover fixed costs from residential PV customers. This NREL study examines the electricity bill implications of various residential rate alternatives for multiple locations within the United States.|
|Report||Net Metering and Market Feedback Loops: Exploring the Impact of Retail Rate Design on Distributed PV Deployment||This report from LBL demonstrates the significant impact that rate design can have on PV deployment|
|Report||The Economics of Grid Defection||This RMI paper looks at the possibility and the ramifications of customers with solar systems and energy storage disengaging from the utility grid|
|Report||Smart Rate Design for a Smart Future||This RAP report examines rate design issues, including rates for solar customers, and offers guiding principles and recommendations to regulators and utilities|
|Webinar||Smart Rate Design for a Smart Future||Related to Smart Rate Design for a Smart Future Report above|
|Report||Designing Distributed Generation Tariffs Well||This RAP report focuses on rate designs for distributed generation, explaining the two main approaches in theory and practice and offering a range of possible alternatives|
|Report||Regulatory Considerations Associated with the Expanded Adoption of Distributed Solar||NREL and RAP produced this report to help regulators:Understand the sources of costs and benefits from increased adoption of distributed PVUnderstand how regulatory models indicate different roles and value propositions for consumers, utilities, and non-utility electricity service providersUnderstand how rate design alternatives affect the value proposition for PV adopters, non-adopters, and utilitiesFrame the discussion with utilities, non-utility participants, and customers as they formulate equitable regulatory and rate design solutions.|
|Report||A Decade of Decoupling for US Energy Utilities: Rate Impacts, Designs, and Observations||Decoupling is a regulatory tool that helps utilities overcome the inherent disincentive to sell less electricity to solar customers by separating the utility’s revenues from its kWh sales volumes. This report summarizes the design and impact of decoupling mechanisms used by 25 U.S. electric utilities.|
|Guiding Principles||Straight Talk About Net Metering||This document from EEI offers an investor-owned utility perspective on net metering and potential alternatives|
|Guiding Principles||Rate Design Guiding Principles for Solar Distributed Generation||This document from SEIA offers a solar industry perspective on rate design for distributed generation customers|
Utilities, customers, and regulators need to understand the costs and benefits associated with distributed solar in order to make informed decisions about policies, rates, and investment decisions. The costs and benefits vary based on geographic location and level of solar deployment on the grid. These values also vary with time. Several good resources exist that offer examples of existing “value of solar” studies or generic methodologies for determining the value of solar in any jurisdiction. In addition, once the costs and benefits of distributed solar are understood, the natural follow-up question is how can the value of a potential solar system be maximized for the benefit of all parties?
Value of the Grid to DG Customers
With so much attention being paid to determining the value of solar generation to the grid, IEE developed this report looking at the value of the grid to solar customers.
Methods for Analyzing the Benefits and Costs of Distributed Photovoltaic Generation to the U.S. Electric Utility System
This NREL report describes the current and potential future methods, data, and tools that could be used with different levels of sophistication and effort to estimate the benefits and costs of distributed PV from the utility or electricity-generation system perspective.
|“Postcard”||So you have questions about… Value of Solar Tariffs||This NREL postcard offers a brief explanation of value of solar tariffs, resources, and technical assistance on a single page.|
|Website||Solar Cost-Benefit Studies||On this web page, SEIA provides a fairly comprehensive list of the various cost-benefit studies that have been conducted across multiple states (with links).|
|Report||A Review of Solar PV Benefit & Costs Studies||RMI summarizes and compares the methodologies and results of more than a dozen PV cost-benefit studies.|
|Report||A Regulator’s Guidebook: Calculating the Benefits and Costs of Distributed Solar Generation||This IREC report provides analysis and recommendations for key issues in solar valuation studies.|
|Report||Shining Rewards: The Value of Rooftop Solar Power for Consumers and Society||This report by Environment America offers a rebuttal to the argument that net metering tariffs overcompensate solar customers at the expense of other ratepayers.|
|Report||Value of Solar: Program Design and Implementation Considerations||This NREL report discusses and addresses “value of solar” tariffs. It examines rate design options and considers how this rate design may impact future development of distributed PV projects.|
|Report||Minnesota Value of Solar: Methodology||The Minnesota Department of Commerce developed this “value of solar” methodology that Minnesota utilities can use as an alternative to net metering.|
|Report||Maine Distributed Solar Valuation Study||The Maine Public Utilities Commission published this assessment of the value of distributed solar generation in Maine.|
|Report||Valuation of Solar + Storage in Hawaii: Methodology||This report offers a method to quantify the added economic benefits that could result from adding behind-the-meter storage to supplement solar energy generation in Hawaii. The method provides a useful framework and information tool that can be used to conduct a more comprehensive valuation analysis in Hawaii and other states.|
|Report||Teaching the “Duck” to Fly (2nd Edition)||This RAP paper suggests a variety of ways to mitigate the potential negative impacts of distributed generation on the grid and maximize the value of solar|
|Report||The Flexible Solar Utility: Preparing for Solar’s Impacts to Utility Planning and Operations||This report seeks to identify ways that utilities can proactively prepare for solar growth on their system while maintaining a successful utility business.|
|Report||Bridges to New Solar Business Models: Opportunities to Increase and Capture the Value of Distributed Solar Photovoltaics||In this report, RMI investigates opportunities to optimize and demonstrate the value of distributed solar as it is integrated into the grid to utilities, customers, and solar companies alike. The report highlights three promising “building blocks” for bridge business model strategies that can enable stakeholders to increase, capture, and share value.|
The feasibility and the costs of installing a solar system depend on more than just utility rates. State interconnection procedures, which establish standards and process that must be met before any solar system can be connected to the grid, ensure the security and reliability of the electricity grid. These interconnection procedures are absolutely necessary, but they can add to the costs of deploying solar and in some cases erect barriers. Similarly, local governments may have permitting or zoning requirements that add to costs or erect barriers. Collaboration with the utility on satisfying (and potentially improving) interconnection procedures is vitally important to the successful deployment of solar. What’s more, the establishment of proactive, streamlined, best practice interconnection and technical standards can enhance the value of solar systems by ensuring that they are interoperable with the grid.
Interconnection of Distributed Generation to Utility Systems: Recommendations for Technical Requirements, Procedures and Agreements, and Emerging Issues
This RAP paper provides recommendations on technical requirements, procedures, and agreements for interconnecting distributed generators in the 10-20 megawatt range. The paper also summarizes emerging issues that states may need to address in the future, such as modifying interconnection rules to better address high penetration of distributed generation and revising screening criteria that determine the level of system impact study conducted for a proposed interconnection.
Advanced Inverter Functions to Support High Levels of Distributed Solar
This short NREL publication looks at the capabilities of advanced inverters and outlines regulatory and policy considerations for their deployment.
|Report||A State-Level Comparison of Processes and Timelines for Distributed PhotovoltaicInterconnection in the United States||NREL presents results from an analysis of interconnection and deployment processes in the United States using data from more than 30,000 residential and small commercial PV systems installed from 2012 to 2014.|
|Report||Model Interconnection Procedures||IREC identifies several important evolutions in best practices for interconnection and synthesizes them into model interconnection procedures.|
|Report||Residential Solar Permitting Best Practices Explained||A review by IREC of current residential solar permitting best practices, along with relevant resources to help communities implement them.|
|Report||Sharing Success: Emerging Approaches to Efficient Rooftop Solar Permitting||In this report IREC outlines innovative strategies being implemented across the U.S. to increase the efficiency of permitting procedures for rooftop solar systems.|
|Report||Simplifying the Solar Permitting Process: The Importance of Consistency||IREC and The Vote Solar Initiative offer nine best practices in residential solar permitting which can offer significant efficiency benefits.|
|Reference Library||Rule 21 Smart Inverter Working Group Technical Reference Materials||This webpage offers links to a variety of documents relating to the California Energy Commission docket on interconnection and smart inverters.|
|Report||IEEE 1547 and 2030 Standards for Distributed Energy Resources Interconnection and Interoperability with the Electricity Grid||This NREL report provides a short synopsis of the history of the IEEE 1547 interconnection standards, an update on its current status, and a look at the future direction of the ongoing standards development activities.|
This section offers a variety of examples of successful collaboration between utilities and non-utility solar system owners (be they customers or third parties). These examples reveal why and how collaboration was undertaken, and what benefits were realized.
|Case Study||Community Solar Case Study: Clean Energy Collective and Fort Collins Utilities||Clean Energy Collective: Case study of a municipal utility working collaboratively with a third party to develop a community solar project|
|Article||In Vermont, A Forward-Thinking Utility Is Helping Customers Share Solar Power||This Fast Company article offers a quick look at how one utility is partnering with its customers and third parties to accelerate PV deployment.|
|Article||Capturing Distributed Benefits||ConEd: Case study of an IOU encouraging solar and other distributed resources to defer the need for more costly infrastructure upgrades|
|Report with Case Studies||Maximizing the Value of Photovoltaic Installations on Schools in California: Choosing the Best Electricity Rates||NREL: This report examined almost two dozen electricity rates available to schools served by three California utilities in order to identify common rate structure attributes that are favorable to PV installations|
|Case Studies||Minimizing Overlap in PV System Approval Processes: Case Studies and Analysis||IREC reviews in detail the steps for obtaining each necessary approval for residential rooftop PV projects in four different markets in the United States to better understand the relationship between the different approval processes and the challenges in each.|