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Bob Gibson | SEPA


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  • This is an excellent presentation. Does a great job of explaining how the Utilities industry is adopting solar as part of its offerings to electric customers and why.
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Bob Gibson | SEPA

  1. 1. Helping Utilities Make Smart Solar DecisionsElectric Utilities and Solar: Threat or Opportunity? Solar Institute - April 26, 2011 Bob Gibson, Vice-President, Market Intelligence, SEPA
  2. 2. About SEPA• Formed in 1992 as the Utility Photovoltaic Joint Action Agencies, G&Ts, RTOs, Group FPR Wholesale Affiliates Marketers,• Educational non-profit IPPs organization (501 c 3) Utilities Business &• Provides unbiased solar Professional Services Manufacturers Project information, services and Developer/ Installer/ events with a utility focus Distributors Helping Utilities Make Smart Solar Decisions
  3. 3. Adoption of Solar by Utilities• Electric utilities have long been an important player in the testing and demonstration of solar technologies• But acceptance of solar as a viable commercial energy resource is relatively new in the U.S., and varies from utility to utility• Utilities are moving from no engagement, to acceptance, to accomodation, to recognizing solar as a having definable business value Helping Utilities Make Smart Solar Decisions 3
  4. 4. No Utility Engagement ‘Classic” Utility view • No solar resource in my service territory (despite what the solar resource map might show) • Too small and too expensive • Linemen safety concerns • Intermittent and variable • Net Metering a ‘line in the sand’ issueHelping Utilities Make Smart Solar Decisions 4
  5. 5. No Utility EngagementBarriers to solar• Solar and utility in adversarial relationship• Complex interconnection process• Costly and unnecessary requirements (insurance, disconnects, metering) Helping Utilities Make Smart Solar Decisions 5
  6. 6. Managing Customer Use of SolarBarriers to solar• Solar and utility still in adversarial relationship• Islanding (during outages) issue stirs safety concerns• Expensive novelty purchase by wealthy customers that may have negative rate impact on non- participants• Solar looks like revenue-robbing demand side product Helping Utilities Make Smart Solar Decisions 6
  7. 7. Accomodating Customer and Utility Use of SolarToday’s Shifting ParadigmStill somewhat adversarial relationship between utility & solar industries, but…• Increased customer demand drives improved interconnection process• Utilities no longer question whether to consider solar but rather how and how much• Solar industry is beginning to recognize the value of utilities as partners• Utilities actively engaged in identifying technical solutions to manage effects of variability on the gridSource: SEPA 2010 Helping Utilities Make Smart Solar Decisions 7
  8. 8. Meeting Solar Goals or RequirementsSource: DSIRE Helping Utilities Make Smart Solar Decisions 8
  9. 9. Solar Business Models Emerge• Policy and mandates drives rapid deployment of solar at increasing number of utilities• In complying with requirements for solar, utilities begin to design business models that accommodate solar growth while meeting overall utility goals• Declining cost of solar begins to approach grid parity in some service territories – gets attention of utilities outside ‘solar-active’ states Helping Utilities Make Smart Solar Decisions 9
  10. 10. Growing U.S. PV Market• Rapidly growing market with new focus on utilities• Larger project sizesSource: IREC Helping Utilities Make Smart Solar Decisions 10
  11. 11. Sign of Change – Investment by Unregulated Utilities• Examples of Unregulated Utilities and Utility Holding Companies making business from solar: 1. Solar Project Development and Operation • Sempra Generation (SDG&E): 48 MW for PG&E • PSE&G Solar: 12 MW for Ohio Power • Exelon Generation – 9 MW for ComEd • NextEra (FPL): 10 MW for FP&L • Duke Energy Generation: 17 MW in Texas for CPS Energy • Southern Company and First Solar: 30 MW in New Mexico for Tri-State G&T (co-op) 2. Capital Investments • PG&E : $60M financing SolarCity; $100M financing SunRun Helping Utilities Make Smart Solar Decisions 11
  12. 12. Results of Policies Driving Utility Involvement• Complying with regulation/legislation has pushed learning curve with solar• Utilities actively engaged in customer and incentive programs – increasingly complex and vary widely state-by-state• With ‘retail grid parity’ on the horizon, economics and competitive business pressures are expected to become a dominant driver Helping Utilities Make Smart Solar Decisions 12
  13. 13. Regulatory & Business Challenges• Solar Ownership: Who owns the solar assets?• Solar Value: How can utility add value in the solar markets that others can’t (or aren’t)?• Competitive Issues: What challenges are utilities facing from stakeholders?• Stakeholder Impacts: Who benefits and who pays for utility solar activities, and how significant are these impacts? Helping Utilities Make Smart Solar Decisions 13
  14. 14. Utility Solar Trends• Continued decline in prices drives attention along with policy• With PV prices dropping, PV is replacing Concentrating Solar Power in some large projects• Increased geographic diversity – in 2008 75% of grid-connected solar was in California; in 2010 that fell to 35% (source: SEPA utility solar rankings)• Rise of interest in community solar• Continued increase in utility ownership (as opposed to most solar procured through a PPA) Helping Utilities Make Smart Solar Decisions 14
  15. 15. Utility-Scale Market in U.S.• Dramatic growth curve• 2010: 169 MW of utility-scale (5 MW and above) connected• Last quarter of 2010: Ground broken on 394 MW• Last quarter of 2010: Almost 2 GW of solar projects announced – Includes PV and Concentrating Solar Power Helping Utilities Make Smart Solar Decisions 15
  16. 16. New Jersey: The Promised Land?• New Jersey – Second largest solar state (MWs installed) in the U.S. – and nowhere near the sunny southwest! – Strong support from state commission for utility rate recovery has spurred innovative utility solar business models – Incentives driving residential, commercial (rooftop, ‘brownfields’ sites) – Utilities gaining critical experience with grid integration issues – Will regulatory and legislative support be maintained? Helping Utilities Make Smart Solar Decisions 16
  17. 17. PSE&G – New Jersey 40 MW of solar, one power pole at a timeUtility-ownedcommercial rooftopsolar (part of 3.2 MWproject and 57 MWtotal) Helping Utilities Make Smart Solar Decisions 17
  18. 18. What’s Next?• Can cost allocation of distributed solar be allocated fairly in the eyes of all stakeholders?• Will improved electronics, a functioning Smart Grid, smart inverters, affordable storage, etc. allow utilities to effectively and affordably manage solar as a productive mainstream asset?• Solar may be a bellwether of the end of the traditional utility business – will utilities adapt and thrive in a new energy world? Helping Utilities Make Smart Solar Decisions 18
  19. 19. Helping Utilities Make Smart Solar Decisions