By: Kristina Mohlin, Visiting Economist; Beia Spiller, Economist; and James Fine, Senior Economist
Source: Duncan Rawlinson
At EDF, our eyes are fixed firmly on improving local air quality and reducing global warming caused by fossil-fuel based electricity. We have high hopes for the role that clean, renewable, and distributed energy solutions like rooftop solar can play in “decarbonizing” our energy system. To get there, the price must be right for residential solar to flourish. With recent price drops (e.g., the cost of solar panels has declined by around 75 percent since 2008) and innovative new financing tools, residential solar is booming. However, this exacerbates the need to find a balance between rewards for investors (a.k.a. home and building owners) and service cost recovery for electric utilities.
California and other states are considering substantial changes to how distributed energy resources are compensated, revisiting both the underlying tariff structures along with how PV customers are paid for generation. Thus, it is both timely and crucial to analyze how these impending changes may affect investment in solar photovoltaic (PV) energy and its long-term viability.
EDF’s new SolaROI study explores how Pacific Gas & Electric’s (PG&E) proposal for new electricity rates impacts the residential customer’s return on investment (ROI) from installing rooftop solar. Read More
Source: Gray Watson, http://256.com/solar/
Earlier this year, North Carolina considered providing the aerospace giant Boeing with incentives and other tax credits worth up to $2.5 billion if the company built a new manufacturing facility in the state. Given the high cost of attracting industry and jobs, North Carolina should be removing roadblocks instead for one of the fastest growing sectors already in the state – solar energy.
One recent study ranks North Carolina #2 in the country for total solar investment, and another ranks it as #3 in the country for the total amount of solar energy installed in 2013. This represents significant amounts of private capital being put to good work, creating jobs and making our farms, homes, and businesses more energy independent. Read More
Most people do not typically associate Minnesota with abundant sunshine, but after a landmark decision by the Minnesota Public Utilities Commission (PUC) yesterday the sun is definitely shining on this snow-swept state. The PUC established the first statewide program to fairly value investments in rooftop solar electricity generation. I listened to a portion of the public meeting and oral arguments, which lasted several hours and demonstrated much thoughtful work. Through a refreshingly civil display of democracy and Midwestern hard work, state officials, utilities, and the solar and environmental community were able to hash out a method for valuing solar resources that are key to a clean energy future.
Yesterday’s decision dealt with the ongoing debate over how much solar power is worth to a utility, its ratepayers, society, and the environment. The PUC did not establish a set price for a statewide solar tariff, but rather the method to be followed when utilities calculate how much to pay for electricity generated by rooftop solar systems. Minnesota utilities will now have the option to file tariffs using this method instead of net metering, the more common but controversial and less scalable cousin of the “value-of-solar” (VOS) tariff.
This commentary originally appeared on EDF Voices blog.
Rooftop solar owners in Arizona will pay higher costs for utility service under a new decision by state regulators, but the increase was much lower than the amount sought by Arizona Public Service, the state’s largest utility company. Both sides claimed victory. The case is part of a growing trend of more states reviewing these charges.
What is net metering?
The case involves a practice known as “net metering” where the utility pays rooftop solar owners for the excess energy the rooftop solar panels send back to the grid. Most states allow net metering. In many states, the utility company pays rooftop solar owners the full price the utility charges for power it delivers to customers. Utility companies claim this price is higher than their actual cost to produce electricity. The rooftop solar industry claims that raising costs would crush a new industry that provides cheap, clean energy and fails to recognize the benefits provided by rooftop solar.
Regulators must find the right balance between utilities and the rooftop solar industry by allowing utilities the opportunity to recover all their costs while ensuring that rooftop solar owners receive full credit for the benefits they provide to the electric distribution system.
Posted in Smart Grid Also tagged Arizona
Like the tide washing upon the shore, new technologies are gradually eroding electric utility revenues. These new products enable consumers to use cleaner energy and use it more efficiently. Electric utilities worry this trend will ravage their industry just as wireless technology convulsed the telecommunications industry. The utility industry urges its members to stem the tide by, among other things, increasing consumers’ net metering costs.
Net metering makes small-scale renewable energy, such as rooftop solar panels, more affordable by crediting the “distributed generation” owners for the excess energy they produce. The electric meter measures how much electricity flows back to the grid from the distributed generation unit. A corresponding credit is applied to the consumer’s monthly energy bill. The Energy Policy Act of 2005 requires public utilities to offer net metering to all consumers upon request.
Why the new focus on net metering? The cost for rooftop solar panels has fallen 80% since 2008, including 20% in 2012 alone. Installed rooftop solar energy has increased by 900% between 2000 and 2011. As consumers install more rooftop solar panels and net meter them, utility revenues will decrease. Read More