SOLAR TODAY - June 2009

“We have learned that we can’t just substitute solar for
coal, but we have to urge utilities to start learning how to
better orchestrate all their resources.”

—Jennifer Feyerherm, director of the Sierra Club in Wisconsin

in seven categories — generation capacity, generation reserve, purchased power, line losses, distribution system investment deferral, procurement-related and environmental compliance — with a bottom-line value of more than $3.8 billion.

The analysis was marked by one big difference in utility operations since deregulation — the fact that generation is dispatched region-wide by an independent system operator instead of by each local utility running its own plants. As the load starts to peak, operators call on more generating plants, based on location and cost. Operators pass the fuel costs, operating costs and transmission congestion costs along to each utility in the form of loca-tional marginal prices, or LMPs. A carefully designed solar strategy helps utilities to avoid high LMPs and other marginal costs. In short, a lot of solar benefits are found on the utility side of the meter and would be lost in a typical, customer-based solar program. A typical customer-based program would focus more simply on offsetting customers’ bills.

As a result of this research, in January the Wisconsin Public Service Commission ordered a statewide utility solar collaborative to take a closer look at how Wisconsin utilities, their customers and the public at large might benefit from utility solar strategies. According to Jennifer Feyerherm, director of the Sierra Club in Wisconsin, “We have learned that we can’t just substitute solar for coal, but we have to urge utilities to start learning how to better orchestrate all their resources.”

The orchestration of solar with wind, biomass, energy efficiency and other new and conventional resources might ultimately revolutionize the utility industry. Some of the necessary analytic tools, smart grid technologies and business strategies are still being tested. Federal and private industry researchers are working to answer questions like, how much credit should solar receive as a capacity resource, based on its proven availability to serve peak loads? What measures, such as

30 June 2009 SOLAR TODAY solartoday.org

distributing PV over a larger geographic area or using customer load control to fill solar performance gaps, could improve utility confidence in PV? What allowances might regulators consider to balance the high investment cost of solar against its value as a long-term, fuel-free resource? This kind of research, backed by policy, could assure that more solar benefits get counted and shared between utilities and the communities they serve.

According to Fred Lynk, manager of renew- Moving Ahead While
ables planning for PSE&G, his utility’s new Pursuing the Perfect
solar program was triggered by a combination According to Mike Taylor, utilities pro-
of economic and community concerns. On the gram manager for the Solar Electric Power
economic side, New Jersey utilities are paying Association, questions are bound to linger
the highest prices in the nation — up to $675 about whether a big rollout of utility-owned
per megawatt-hour — for solar RECs. To com- solar is in the public’s best interest. A lot of
ply with the state’s RPS, the utility will have solar manufacturers are looking at the util-
to cover more than 2 percent of its retail sales ity solar boom as their best hope to grow the
with RECs by 2021. PSE&G planners figure it industry. “Once utilities are buying megawatts
would be cheaper, faster and surer to generate of solar, more plants will get built, process
some of their own solar RECs, instead of buy- improvements will happen, and some costs
ing them all at market prices. “We will still buy will come down for everyone,” Taylor says.
RECs from customer-owned PV, and we still But some small solar businesses, independent
have our solar loan program. We just need that installers and big solar developers worry about
much more solar,” Lynk says. whether utilities — traditionally the bullies on
In 2008, a new state law, aimed at meet- the field — can really play fair. A coalition of
ing climate policy goals, opened the door solar businesses and community activists in
for New Jersey utilities to own distributed California has successfully fought some util-
generation, including PV. PSE&G planners ity solar proposals, including a March ballot
took note. In November, when federal legisla- measure that the Los Angeles Department of
tion extended the 30 percent solar investment Water and Power sponsored. It would have
tax credit (ITC) and made utilities eligible authorized more than 400 megawatts of utili-
to take it, the utility put solar planning in ty-owned PV. Utilityleadershopetonegotiate
high gear. Lynk says he hopes to get capac- a revised, but similar plan.
ity credit from the regional system operator Most solar advocates want to see allow-
for PV’s on-peak performance. Everybody ances for broad competition and transparency
involved in the program will keep working to in utility procurement processes. Some want
enhance the economic benefits, but the util- provisions for union labor; others want provi-
ity is not looking for a quick payoff. Utilities sions to protect nonunion shops. In light of
have what Lynk calls “patient money” and a the urgent need for more solar investment,
vested interest in helping to lead the nation’s more green jobs and an ultimate shift from
economic recovery. utility reliance on coal, Taylor says some of his

PSE&G has stressed how this program, colleagues have started to repeat an old saw: dubbed “Solar 4 All,” is right for the times “In pursuit of the perfect, be sure the good is ( pseg.com/solar). An official release notes, not lost.” ST

“We designed our program to be sure that everyone has access to the benefits of solar energy.” In effect, it will bring megawatts of solar to public facilities and urban neighborhoods where individual customers might scarcely afford a solar calculator, much less a solar home. It will fast-track hundreds of green jobs and support the development of the solar industry in the region.