Smart Utilities See Distributed Generation Solar As An Opportunity

Contributors
Written by Nora Caley
on December 17, 2013 No Comments
Categories : New & Noteworthy

13599_toysolarhouse Smart Utilities See Distributed Generation Solar As An Opportunity Utilities are no friend of rooftop solar. At least that's the general impression one might get from recent media stories about utilities engaging in net metering disputes with their customers. But while Xcel Energy in Colorado and Arizona Public Service Co. continue their highly publicized disputes with solar customers over rates and fees, some industry onlookers say other utilities are quietly welcoming a future of distributed solar.

Last August, Citi Research, in its report ‘Rising Sun: Implications for U.S. Utilities’ indicated that the power struggle between solar and utilities will continue as solar grows. ‘Solar, more recently, has become one of the more polarizing topics in the power industry with some utilities joining the party, some doing just what is legislatively mandated, and others remaining reluctant and not being true believers,’ the report says.

Citi called distributed generation (DG) the next driver of growth in the U.S. as utility scale solar spending normalizes. The growth will depend on several factors, including how well the parties can agree on certain details. ‘Can solar providers and utilities reach a middle ground on adequate compensation for DG? We think so,’ the report authors conclude.

For now, some utilities are focusing on other details besides net metering, and finding creative ways to help customers build DG solar. Bob Gibson, vice president, education and outreach for the Solar Electric Power Association (SEPA), says that's the main purpose of the Washington, D.C.-based organization. ‘We are trying to help utilities use solar more effectively,’ he says. ‘We are seeing tremendous interest, and everyone is looking for what is the answer for them.’Â

The answers are so different for each state and each utility that thus far, the efforts have been scattered. For example, Gibson says, in New York, Con Edison engineered a new technology for the network protectors when Jetro Cash and Carry's Restaurant Depot installed 4,760 SunPower panels for a total of 1.56 MW. When the panels produce more power than the warehouse and store need, the system sells it to Con Edison. That was made possible by a change in network protectors' settings.

In a conventional setting, the protectors open and take electrical-delivery equipment out of service when they detect a fault. The trick was to make the network protector not open in response to a large amount of power flowing back into the grid from Jetro, but still make the protectors open if they detect an actual fault.

‘If things like that are successful, other utilities will see it can be done,’ Gibson says. ‘They have to set a precedent to get others onboard. There are examples all over the country of utilities doing things.’

Micah Myers, senior vice president of corporate development for San Francisco-based Clean Power Finance (CPF), says investment in DG will come from utilities' holding companies, which have more flexibility than the utilities themselves. ‘With the regulated utilities, any money they invest they have to make a case to the commission,’ he says. ‘The parent companies who own those utilities can invest in solar.’

Earlier this year, CPF announced that Duke Energy, the Charlotte, N.C.-based holding company for utilities in six states, and Rosemead, Calif.-based Edison International, the holding company for Southern California Edison and other companies, became equity investors in CPF. The firm provides financial services and software to the distributed solar industry.

‘You're not seeing a lot of press about it, but they are all looking at distributed solar,’ Myers says. ‘That's where you see utilities or their holding companies look at new business models. They are not going to help customers go solar unless there is profit. We help them profit, and we think that will be continuing.’Â

Some utilities are creating new business models to profit from solar. PSE&G in New Jersey launched its Solar Loan Program in 2008. Since then, more than 1,000 residential and commercial customers have used the loan program to help finance solar projects on their sites. PSE&G launched the next phase of the program this year and will support the financing of 97.5 MW of distributed solar built on landfills and brownfields, and also residential and commercial buildings.

Todd Hranicka, director of solar energy for PSE&G, says the program is part of the New Jersey Energy Master Plan that Gov. Chris Christie announced in 2011. Among the goals of that plan, according to a press release from the state, is ‘to make New Jersey the largest and fastest-growing solar energy market in the United States.’

In PSE&G's Solar Loan Program, the loan amount can total 30% to 50% of the total project cost. The loans have a 10-year term with an interest rate of 11.179%. The customer repays the loans with cash or solar renewable energy certificates (SRECs). The SRECs have a minimum floor price.

‘That market has been volatile,’ says Mike Peters, solar loan program manager for PSE&G. ‘The borrower is allowed to pay down the loan priced at that floor value, so it brings certainty to the homeowner or business owner.’

Gibson, from SEPA, thinks there will be more of these programs in the future. ‘Smart utilities think, 'Solar is going to happen whether we like it or not, and are we going to lose revenue or can we provide other services to make customers happy.'’

Nora Caley is a freelance writer based in Denver.

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