Turn Your Utility toward the Sun

In the June 2008 issue of Solar Citizen we reported on a new study that shows that solar power could provide 10% of US electricity needs by 2025 with the active participation of electric utilities.  It also makes the point that without utility involvement, solar will never grow to become a significant contributor to our energy future.

Many solar citizens consider the involvement of utilities in solar generation tantamount to a hijacking by Big Business of the yeoman-generator model of energy self-sufficiency.  Given how, in any recent age, BB has repeatedly subsumed everyday commerce into its ambit by means fair or foul, this is not an unreasonable fear.  And if Big Utilities use their clout to siphon off funds, taxes or credits intended for citizen-level initiatives, the fear will have been realized.  But the recently-passed American Recovery and Reinvestment Act (aka Stimulus Package) has provided considerable support for clean energy at all levels, including residential rooftop solar, and absent BB end-runs that somehow evade the attention of  advocacy watchdog groups, we feel that both ends of the spectrum will be served.

At the distributed end of that spectrum, where reside customer-owned residential and commercial systems, what is most crucial to success is the attitude of your electric utility to net metering and interconnection;  more of that below.  But whatever your utility’s attitude, it will need to plan now for integration of solar into its fuel source mix, as we prepare for the probability of a national renewable electricity standard and as coal, oil and gas become progressively less acceptable and more expensive.
The Utility Solar Assessment (USA) Study

The Utility Solar Assessment (USA) Study, referenced above, was jointly produced by research firm Clean Edge and the non-profit organization .  It must have had an effect on utilities, since Co-op America (now renamed Green America) staffers have told us that several have called them since its publication to ask how they can get on board!

The Good, the Bad…

The fact is, however, that no two utilities of the 3000-some across America are on board the same boat.    Some have done their homework well enough to understand the economic and environmental arguments of starting the move to solar:

• Southern California Edison, which has launched an $875M project to install 250 megawatts of PV on commercial rooftops in Southern California;

• Further north, Pacific Gas and Electric, which has announced a deal with two solar ‘farms’ for some 800 megawatts of PV energy;

• Duke Energy in North Carolina, which has undertaken to buy the entire output of the nation’s largest PV facility, planned for Davidson County, NC;

• Arizona Public Service, with its 280-MW solar thermal project with storage;

• NextEra Energy Resources, planning a 75-MW solar thermal plant in Florida.

(Read more about these developments here, courtesy of RenewableEnergyWorld.com).

But only about 20% of American utilities even participate in green energy programs, according to EnergyBiz Insider Ken Silverstein.  And if most of them are like Baltimore Gas & Electric, they may be missing out on solar opportunities.

A few miles outside Baltimore, at their power-train plant in White Marsh, MD, General Motors is planning to build a 1.2-megawatt solar installation, whose operation will reduce the amount of power GM buys from BG&E by some 20%.  That’s a lot of revenue for the utility to lose, but only the tip of the iceberg if many more large users follow GM’s example and ‘defect’ to solar.  If it were BG&E and not SunEdison installing and operating the GM system, the utility could retain the income stream, contribute to Maryland’s renewable portfolio standard (20% by 2022), and establish itself as a legitimate solar provider.

The further implication, of course, is that if BG&E is missing out on solar, so might you be, if you’re a customer of theirs.

…and the Ugly

It’s not just in their approach to large solar projects that utilities across the country differ from each other.  Everyday users of solar power in many U.S. states know very well, from their experience of installing and running a rooftop solar installation, how their utility feels about distributed generation.  In seven states there are no statewide standards under which customer-generators can receive credit for the power their solar arrays feed to the grid (net metering, see below);  in thirteen there are no statewide interconnection rules governing how a customer-generator interfaces with the grid.  And in the states that have such standards, the utilities’ performance in accommodating customer-generators’ needs ranges from active encouragement to downright deterrence.

(Find out how your state rates: download Freeing The Grid, a country-wide report published by the Interstate Renewable Energy Council (IREC) on best and worst practices in net metering and interconnection, here).

In one way, and given that most utilities’ priorities are oriented toward returning value to shareholders, their resistance to schemes that actually reduce the amount of product they can sell is understandable.  But in a world where renewables are taken more seriously as energy sources than ever before, this resistance is becoming increasingly reactionary.  It’s to obviate this resistance that some states have adopted policies in which utility profits are decoupled from sales of electricity.  The Solar Electric Power Association (SEPA), a trade group for utilities and the solar industry, has published a landmark report on decoupling, available for download here.

One Utility that Gets It

Intriguingly, it’s not just the Western utilities mentioned above who are pioneering in the solar arena.  As an example of a forward-looking investor-owned utility (IOU) that embraced new solar programs, we cite New Jersey’s Public Service Electric & Gas Company (PSE&G).  This month, PSE&G announced a plan to invest $773 million to add 120 MW of PV within its territory.  The plan will involve installing PV panels on up to 200,000 utility poles, small rooftop PV systems on government buildings, large-scale solar power plants on its own property, and solar systems on affordable housing.  The systems will all be owned by PSE&G, meaning that the power produced will feed the grid directly, relieving peak congestion and contributing to emissions reduction in the state’s power sector.

An important catalyst for PSE&G’s action was the removal, in October last year, of the prohibition on IOUs taking advantage of the federal investment tax credit for PV projects, a move that should result in many more similar initiatives.

In commenting on the PSE&G announcement, SEPA executive director Julia Hamm spoke in terms of solar adoption as an inevitability, rather than an option, for utilities.  “IOUs across the US are in the midst of strategizing not about whether they should incorporate solar into their generation mix, but rather how and how much.  There are many options available to utilities, ranging from purchasing solar kilowatt-hours from large-scale central station plants and small distributed solar plants on customers’ rooftops, to owning their own central station and distributed solar facilities.  The question utilities are now investigating is which business model, or combination of business models, will be most beneficial to the utility, its shareholders, and its customers.”

Hamm was already impressed with PSE&G on account of their solar loan program, designed to help  customers install solar PV in a net metering configuration.  The loan program, she says, had been worked out in collaboration with the solar industry, establishing a sense of confidence that there was nothing duplicitous about it.  And as you can see from the abovementioned IREC report, New Jersey boasts one of the most positively-reviewed net metering/interconnection regimes in the country.  The Garden State is also working hard to join those states (California, Delaware, Idaho, Maryland, Massachusetts and New York) with decoupling policies in place.

What You Can Do

You can actually have an impact on the issue of utilities and solar in your own state.  Because even if your utility is one of those immovable objects in the road to renewables, the irresistible force that will get their attention is demand.  And you can provide that demand by asking the right questions of your utility and of the state agency charged with its oversight.

You need to know where your utility is, on a scale of ‘already on board’ down to ‘didn’t even make it to the dock’.  And you should ask how much pressure your state’s oversight agency is putting on utilities to adopt solar programs.  We’re hoping you’ll take a few moments to contact one or both of those organizations and let them know that you represent demand (as in, you demand to get your electricity from solar), so they’d better take notice of you!

Note:  Unlike those occasions when we ask you to send messages to members of Congress, etc., we can’t give you a link to click in order to reach the CEO or customer service department of your utility, or the state agency charged with utility oversight.  You should find appropriate contact information for the former in your monthly electric bill (perhaps in the small print!), and for the latter on your state government’s web site (with the name of Public Utilities or Services Commission, Board or Department of Public Utilities, or other similar title).

To the Utility:

Here are some questions your utility:

a) might be perfectly happy to answer, if they’re one of those gaining business by investing in solar;

b) might be uncomfortable answering, if they’re one of those losing business by not investing in solar.

In either case, you deserve answers to these questions (and explanations, if the answers aren’t what they should be):

1. What are your interconnection and/or net metering policies?*

a. Are your processes and paperwork clear, simple and unambiguous for customers wanting to install grid-tied solar?

b. Do you impose limits on eligible system size?

c. Can customer-generators ‘roll over’ excess generation between billing periods?

d. Do you require customer-generators to pay for additional meters or redundant disconnect switches?

e. Are your approval timelines and interconnection charges greater or smaller than FERC recommendations?

f. Do customer-generators retain renewable energy credits for the energy they produce?

g. Are your fees proportional to the project’s size?

h. Do you require customer-generators to obtain additional insurance?

2. Do you have a green pricing program for retail customers?  Does it incorporate solar power?

3. Do you have an incentive program to help customers install solar systems?  What are the details?

4. How much are you planning to invest in solar generating facilities, either at customer sites or your own sites, to make significant amounts of clean energy available to customers?

To the state oversight agency:

The state government agency sets the operating rules and conditions for all utilities within its jurisdiction.  In the best of cases it can be a prime mover when it comes to enabling solar;  in the worst of cases it allows the utilities to call the shots.  Whichever is the case in your state, it’s just as important for regulators to hear from the public as legislators, and to answer questions like these:

1. What kind of incentives do you provide to encourage utilities to embrace solar programs?

2. Are customer-generators satisfied with the net metering and interconnection rules in force in your jurisdiction?  Are you planning any improvements in this area?

3. What encouragement do you give private entities planning large-scale renewable installations that will lead to reduced emissions and help satisfy a renewable portfolio standard?

And we’d be interested to know what you find out from either the utility or the agency.  Let us know here and we’ll report on your experiences and learning in a future edition of Solar Citizen.

* An interconnection standard is a set of rules under which a customer-generator (such as a homeowner with a solar PV system) interfaces with the grid.  Typically, approval and regulation of system interconnects is performed by the distribution utility!  This gives the utility the opportunity to make the rules and procedures so onerous that they act as a disincentive to the customer-generator.  According to the Network for New Energy Choices September 2007 report ‘Freeing the Grid‘, at least half of the states in the U.S. have less than adequate standards, imposing needless barriers, delays and fees.

IREC’s model interconnection standards can be found here.

Net metering refers to the billing arrangement between the customer-generator and the utility, under which the former may offset the cost of electricity supplied by the latter with electricity generated by the former and supplied to the grid, at the same rate.  According to the Network for New Energy Choices September 2007 report ‘Freeing the Grid‘, at least one quarter of the states in the U.S. have poor net metering rules, imposing disadvantageous conditions on would-be customer-generators.

IREC’s model net metering rules can be found here.