Visit the Solar Institute for details of the 2011 Solar Symposium: solar.gwu.edu/Symposium.html

1. Helping Utilities Make Smart Solar Decisions
Electric Utilities and Solar: Threat or
Opportunity?
Solar Institute - April 26, 2011
Bob Gibson, Vice-President, Market Intelligence, SEPA

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. 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. 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’ issue
Helping Utilities Make Smart Solar Decisions 4

5. No Utility Engagement
Barriers 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. Managing Customer Use of
Solar
Barriers 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. Accomodating Customer and
Utility Use of Solar
Today’s Shifting Paradigm
Still 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 grid
Source: SEPA 2010 Helping Utilities Make Smart Solar Decisions 7

8. Meeting Solar
Goals or Requirements
Source: DSIRE Helping Utilities Make Smart Solar Decisions 8

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. Growing U.S. PV Market
• Rapidly growing market with new focus on utilities
• Larger project sizes
Source: IREC Helping Utilities Make Smart Solar Decisions 10

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. 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. 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. 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. 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. 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. PSE&G – New Jersey
40 MW of solar, one power
pole at a time
Utility-owned
commercial rooftop
solar (part of 3.2 MW
project and 57 MW
total)
Helping Utilities Make Smart Solar Decisions 17

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. Helping Utilities Make Smart Solar
Decisions