SMUD is a publicly owned utility serving Sacramento County that lost over 50% of its generating capacity after the shutdown of its nuclear power plant. To transition, SMUD adopted a strategy to build a diversified portfolio including solar PV. It targeted the residential market and pursued sustained orderly development and technology adoption models to lower costs and encourage market growth. SMUD's solar PV program installed over 10 MW by 2002, making it a leader in the country. The document advocates other utilities can use SMUD's approach as a roadmap and highlights key factors like sustained orders and providing a complete product.

1. SMUD SOLAR
A Roadmap For U,li,es
in Transi,on

2. SMUD SOLAR:
A Roadmap For U,li,es in Transi,on
Warren Schirtzinger, Donald Aitken, Donald Osborn, and Steven Strong

3. • Sixth largest publicly-owned utility in the country
(in terms of customers served)
• Service area: 900 square miles. Includes
Sacramento County and part of Placer County
• Service area population: 1.4 million
• Total number of customers: 589,599 (522,228
residential, 67,361 commercial)

4. An Unplanned Transi,on
• Public vote to shut
down Rancho Seco
• Concerns over safety
of nuclear power
(Chernobyl and 3-Mile
Island)
• Loss of generating
capacity (>50%)

5. 2
Residential
Customers
SMUD Transi,on Strategy
• build a “diversified portfolio“ of power sources
• lower the cost of PV
• strong emphasis on conservation and energy efficiency
• initially target residential market

6. Defini&on: Sustained Orderly Development
• A growing and stable market is ac,vated by orders
that are placed on a reliable schedule.
• The orders increase in magnitude as previous
deliveries and engineering and field experience lead
to further reduc,ons in costs.
• The reliability of these orders can be projected many
years into the future, on the basis of long-term
contracts, to minimize market risks and investor
exposure.
Goal: reduce cost and encourage market
development

7. Defini&on: Technology Adop,on Model
This model describes the market penetration of any new product in
terms of a progression in the types of consumers it attracts
throughout its useful life

8. Discon,nuous vs. Con,nuous Innova,on
Discontinuous Continuous
Hybrid carsElectric cars Diesel
cars
Discontinuous innovations require a
significant change in behavior

9. Innovator
Early Adopter
Early Majority
Late Majority
Product
Tangibles
Product
Intangibles
Products must evolve to
meet the changing
requirements of the end
user

10. Technology Adop,on Checklist
Understand their reason to buy
Recruit partners and allies
Use familiar distribution channels

11. Technology Adop,on Checklist
Understand their reason to buy
Recruit partners and allies
Use familiar distribution channels
YES
YES
YES
YES
YES
YES
YES
SMUD

12. SMUD PV Program Results
● Over 1000 Installations of distributed PV exceeding
10 MW through 2002, (50% of all US grid-connected PV at
the time)
● PV Pioneer I – utility owned, customer sited , supplies grid,
customer green fee, over 600 participants
● District PV Distributed Generation – utility owned,
substation and parking lot sited, distributed benefits
● PV Pioneer II – customer owned, utility buy-down &
finance, net metering
● Davis Solar Pioneer - extended the PV Pioneer II
program to the nearby City of Davis

13. Using SMUD as a Roadmap
• Identify target application that fulfills a
“compelling reason to buy”
• Use the utility’s buying power to reduce the cost of
core technologies (SOD)
• Recruit the partners and allies needed to deliver a
complete package or “whole product”
• Designate a dedicated, knowledgeable, and
committed program team with cradle to grave
responsibility
• Nurture and support the private sector

14. • Integrate rooftop solar with dispatchable, distributed
electrical storage (DDES)
• Transform distributed renewables into a single source of
electricity and smooth out peaks and steep ramps in
generation (“grid assets”)
• Added benefit of supplying backup power, while making
a grid more flexible and reliable
• Similar to distributed solar in the early 1990s:
­ few manufacturers
­ a number of early demonstration projects
­ no real or viable market
­ tremendous unfulfilled promise
A Roadmap for U,li,es in Transi,on
Virtual Power Plant Example

15. Key SOD Requirements to Remember
• Sustained (10 years+)
• Orderly and consistent
• Substantial
• Predictable for investors, manufacturers,
and suppliers
• Credible
• Ramped (no large decreases or sudden
stops)

16. Whole Product Requirements
core product
core product
ongoing
support
standard
package
training or
educa,on
installa,on
services
familiar
billing
maintenance
and repair
reduced
paperwork financing
core product vs.

17. Seven Deadly Sins
• Favoring specific technologies
• Competing with the private sector
• Placing convenience over customer need
• Target customer confusion
• Clinging to old relationships
• Management fragmentation
• Waiting for a commercial market to form

18. SMUD SOLAR:
A Roadmap For U,li,es in Transi,on
Warren Schirtzinger, Donald Aitken,
Donald Osborn, and Steven Strong