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Solar companies and utilities spar on ratemaking at Cleantech Forum SF

2013 March 26

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Representatives of two solar companies (SunRun and Clean Power Finance), two utilities (SDG&E and National Grid), and a smart grid research firm (Pecan Street) sat down for a civilized discussion yesterday at Cleantech Forum in San Francisco. The discussion on distributed solar, power storage, and the evolving role of the utility quickly became a heated debate, dominated by Brian Miller (VP of Public Policy and Power Markets at SunRun) and Lee Krevat (Director of Smart Grid at SDG&E) with ample contributions from Bert Haskell of Pecan Street.

Pecan Street has the most detailed residential energy database on residences in Austin, TX.  Data includes what firms have fitted with the metering, rooftop solar, and electric vehicle charging stations. In one of their pilot studies, it was discovered that there are 200 homes with rooftop solar and 70 electric vehicle charging stations within one square mile, all connected to one transformer. This is likely higher penetration than seen anywhere else in the U.S. date.

Krevat from SDG&E noted that there are now cases in their service territory where energy is flowing from the substation and back into to transmission lines in areas with high rooftop solar penetration on very sunny days. This is worrisome for SDG&E, as they will need to pay for transmission and distribution (T&D) upgrades if the grid is to provide functions beyond the original purpose of providing power in one direction. How will this affect customers? Krevat is worried that the customers with rooftop solar are saving on their energy bills, while the lower income customers without rooftop solar will see increased bills as regulated (and decoupled) utilities need to pass distribution upgrade costs onto their entire customer base.

Miller of SunRun came with talking points pre-prepared. He’s worked for the Department of Energy. He’s worked for big utilities, like Exelon and Constellation Energy. He called the utilities out for deliberately blocking solar’s progress with arguments like this:

Utilities are by far the biggest obstacle. Utility lobbyists out in the trenches against solar. It is against their business model. It’s written in legislative and regulatory proceedings… When distributed generation is high, they will sell less power on their wires, so their objective is to push rates as high as possible.

Krevat contended that indeed it was a ratemaking issue. They can’t put the growing cost of distribution upgrades on a diminishing number of lower income customer. A different rate model might be needed. Haskell of Pecan Street chimed in:

Our observation is that utilities need to move away from charging for kilowatt hours and towards charging for quality of service. Grid connection fees for distributed generation, the amount of reliability the customer desires (# of 9’s), and the cost of putting energy back on the grid.

Now this sounds like an environment for commercial-scale microgrids, but it would be interesting to see how such a model might work for residential customers. Miller continued to provide the talking points for a distributed solar future:

Things are working in California because there are good legislators and regulators who believe in a distributed generation vision. The governor has a 12 gigawatt DG goal. Hawaii is a sneak peek into the future. 5% of homes and 3% of power is now from solar. The transformers haven’t blown up and the lights haven’t gone out.

He backed up his points with a white paper produced by Vote Solar and Crossborder Energy that found that even lower income ratepayers will benefit from higher amounts of net metering. Yes, the utilities have to pay for some additional distribution infrastructure upgrades, but the benefits (power delivery savings, lower cost of meeting renewable targets, avoided transmission upgrades, reduced electricity losses, etc.) will outweigh those costs by $92 million in California.

Have a look and decide for yourself! Leave your comments below.

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