Utilities Engage Solar Electricity
By Mike Taylor, Solar Electric Power Association

The Solar Electric Power Association (SEPA), a non-profit membership organization based out of Washington , DC , has been working with utilities since 1992 to find solutions that facilitate the use and integration of solar electric power. In its fifteen years of existence, utility interest in solar has never been as prevalent as it is today.

Utilities are engaging solar electricity in increasing numbers across the country, ranging from small municipal solar projects at local schools to large utility scale solar power plants. A variety of external factors, ranging from climate change to economic development to regulations, are requiring increasingly sophisticated responses to customer needs and societal requirements. Utilities are using solar programs and projects to improve customer satisfaction, grid reliability, and relationships with regulators, as well as to reduce their impact on the environment, in some cases creating a portfolio of different solar responses to fulfill business needs.

Renewable Portfolio Standards

By far the biggest change to utility-solar decision-making comes from renewable portfolio standards (RPS), which require a percentage of electricity to come from renewable sources by a certain date. Twenty-four states plus the District of Columbia now have an RPS in place, and twelve have a specific solar or customer-sited requirements, which are most likely to be solar. (As of early August, a federal RPS has passed the House and is being debated in the Senate. Generally speaking, most federal RPS legislation acts as a “floor” and does not preclude existing or new state RPS requirements from being higher.)

Figure 1. State Renewable Portfolio Standards and Goals

Source: Interstate Renewable Energy Council, August 2007 (modified from original version)

In the twelve states with solar-specific requirements, utilities must look at the practical value of various strategies for owning, contracting, or incenting the necessarily solar electricity, within the guidelines of the law. In Colorado , where a solar-specific requirement was passed in a voter referendum, Xcel Energy has developed both customer solar incentive programs, as well as centralized utility-contracted solar systems. Similar approaches by other utilities in New Mexico and Nevada have been implemented. In New Jersey , the solar requirements are fulfilled through a solar renewable energy credit (SREC) market, where the SRECs are bought and sold like stocks. Customer-sited generation feeds the SREC markets, which utilities then purchase. Newly passed requirements in Maryland and Delaware appear headed in a similar direction utilizing REC markets for fulfill requirements.

In California, which has a traditional all-source RPS (no solar requirement per say), Pacific Gas and Electric, San Diego Gas and Electric, and Southern California Edison have all signed various contracts for large scale concentrating solar power (CSP) plants that are each hundreds of megawatts in size, on scale with traditional natural gas power plants. The combination of higher wholesale rates, transmissions constraints, project implementation timelines, and CSP's ability to provide firm capacity are causing the utilizies to utilize a more diversified RPS portfolio than other locations, such as Texas, where wind energy has been the dominate technology. In addition to the RPS, California also has a separate solar requirement for 3,000 megawatts of customer-sited systems, which includes customer-incentive programs.

Customer Satisfaction

Not all utilities engage solar through an RPS requirement however. Customers are increasingly requesting more from their utility than just low-cost electricity, and other characteristics, such as the environment, energy independence, and economic development, are playing a part in utilities' new solar programs.

General education, through workshops, classes, event sponsorship, and online/bill information, is perhaps the first point of entry for many utilities. Especially for smaller utilities, community solar projects are a proactive response to customer interest in solar. Solar projects on schools, with associated curriculum, government facilities, or nature centers can provide broad benefits to a variety of customers, without their direct participation in the solar project itself. Several non-profit organizations offer partnership opportunities for utilities that may not have a dedicated staff person to shepherd a project through the development and education process.

Adding solar projects into a green pricing program, which have traditionally been wind energy, is another way solar is being incorporated into electricity customer-choice programs. The incremental cost of blending 10% solar into a green pricing program is small, and the solar projects can be sited locally, unlike many wind projects, providing a more visible presence in the community. Voluntary solar incentive programs are not uncommon either, allowing customers to own and operate a solar system directly. These incentive programs do not necessarily need to cost $1,000,000 or even $100,000, and provide tangible benefits to participants with even measurable customer satisfaction results for non-participants.

Each of these solar options contains different levels of cost and engagement by utilities and their customers. For customers, it can range from passive knowledge through local media, to solar on their local elementary school, to direct installment of solar on their particular home. For utilities, involvement can range from a short-term project to a multi-year program, with associated differences in costs and efforts. One of the keys is to avoid reinventing the wheel and climbing the steep learning curve alone.

Solar Portfolio – Case Study

Pacific Gas and Electric Company (PG&E), one of the utilities most engaged in solar activities, has an impressive array of solar projects and programs, designed to satisfy both customer satisfaction and regulatory requirements.

PG&E's most recent announcement, which will be the world's largest single solar installation when completed, is a concentrating solar thermal project that will deliver 553 megawatts of solar power. Mojave Solar Park will provide the equivalent of powering 400,000 homes and will add a large component to meeting the RPS. On a similar scale for photovoltaics, PG&E announced contracts earlier this summer with two San Francisco companies for 7 MW of utility-scale power. When completed in 2009, one of the projects will be the largest concentrator photovoltaic project in the world.

On the distributed energy side of the spectrum, PG&E has the largest solar schools program in the nation, has interconnected more than 16,000 customer owned photovoltaic systems to the power grid (representing over 110 megawatts and more than any other utility in the nation), offers solar incentives for these customer-sited systems, is installing solar electric systems on highly visible public buildings in the San Francisco area, conducts training for local solar installers, and manages a solar partnership with Habitat for Humanity.

Together, these projects clearly seek to satisfy various requirements but also offer a balance of voluntary programs that address other customer satisfaction and social goals. But not all utilities fall under the same requirements or have the same resources to engage solar on this scale.

Solar Programs Options Tool

Ultimately, utilities are trying to assess a variety of project and program options to satisfy a variety of different business needs and goals. Logically thinking through this process is the goal of SEPA's new Solar Programs Options Tool (SPOT), a free online tool that combines quantitative data with a short user survey to recommend and prioritize types of solar activities for further utility investigation. Recommendations are divided into utility owned projects, customer project partnerships, and other program ideas, such as residential or commercial customer incentives, green pricing programs, educational programs, and research projects.

SPOT is also integrated with the recently released Peer Match tool, a searchable database that matches users with other utilities with solar program expertise. Through a grant from the American Public Power Association's (APPA) Demonstration of Energy-Efficient Developments (DEED) Program, SEPA will release a similarly integrated case study database and expanded version of SPOT later this year. All three (SPOT, Peer Match, and Case Studies) are or will be available on SEPA's website, www.SolarElectricPower.org.

Conclusion

The utility is ultimately the main conduit for all grid-connected solar electricity through the interconnection of a solar system. But for a variety of reasons, utilities are finding that their solar activities are morphing into a more complex set of decisions that balance competing business needs. Thinking logically about the variety of possibilities and stakeholders is an emerging framework that has previously been limited to specific utilities. However, as competing pressures bring solar into the utility world on a wider basis, more and more will need to plan holistically through a solar portfolio of some kind.