Ringing up the Real Value of Solar

No doubt about it, solar power is a growing part of America’s energy future. Communities, individuals and businesses are finding places to install panels or arrays and learning about the costs and benefits of integrating solar into an overall energy mix.  Moving into the future, solar certainly has a role to play as part of a comprehensive energy approach.

A lot of energy will go into solar discussions this week, as utility regulators gather this week for National Association of Regulatory Utility Commissioners in partly sunny California and state lawmakers convene for the American Legislative Exchange Council in Colorado, where daily temps are over 95 degrees, with clouds in the mid-to-late afternoon. PACE’s timely release two days ago of “Net Metering: Costs, Customers and a Smarter Way Forward” co-authored by Dr. David Gattie provides these and other stakeholders with a history of net metering decisions, current snapshots of state debates, and recommendations for moving ahead.

Our and Dr. Gattie’s paper also delves into an important undercurrent of the solar debate – the Value of Solar (VOS).  Solar advocates have often claimed that electrons generated from residential solar sites are just as valuable, and perhaps more so, than electrons from more traditional, central station sources. However, policymakers and consumers alike should recognize that “solar rooftops generate electricity, but that is all they do … residential solar rooftop systems can never be compared apples-to-apples with what full-service utilities provide.”

So, how ‘bout them apples? Why does the VOS argument fall flat? As PACE’s paper goes on to explain, “When a rooftop solar owner becomes a net metering customer, that customer becomes a supplier of electricity. The electrons generated by the solar rooftop are indistinguishable from electrons generated by a large-scale power plant. The difference is that the net metering customer provides electricity only, while the utility provides much, much more.”

VOS arguments are designed to boost the net metering payment to customers of the residential solar rooftop industry, often well above the avoided cost to the utility. Each element of the VOS acts like a coupon offsetting the cost of systems (that most homeowners have to borrow money to afford) by raising the rate utilities (actually their customers) have to pay for solar rooftop electrons.

What do VOS advocates claim in their coupon box?

  • Avoided Capacity
  • Enhanced Reliability
  • Hedge Against Price Volatility
  • Transmission and Distribution Deferral
  • Avoided Line Losses
  • Environmental and Social Benefits

Unfortunately, most of these coupons don’t ring up on the cash register of reality. The reason isn’t that utilities are full of unfair people who fear competition from a new generation source.  The real reasons: physics and the nascent state of energy storage technologies. Regarding reliability and capacity claims – just because solar installations are physically closer to customers than some central-station generation doesn’t mean the distributed systems somehow support the grid or get power to the customers more reliably and rapidly.

Because solar power is intermittent by nature and there isn’t yet an adequate amount of battery or other storage, other generation sources are “called on to back up solar power, not the other way around.”

The National Energy Renewable Laboratory (NREL) “calculates the value of transmission and distribution deferral from solar power, under the maximum conditions, to be less than two-tenths of a cent per kilowatt-hour.”  While in some cases, a particularly well-designed solar rooftop community might reduce a bit of local congestion, generally the introduction of solar rooftop systems does not in any way alter overall system requirements for transmission and distribution build-outs and maintenance. Again, refer to intermittency and the mandate on utilities to provide everyone power all the time.

In the recent net metering paper, PACE and Dr. Gattie take on several other elements of the VOS movement, explaining why those elements lack basis in reality or research. You can read the paper here and reach your own conclusions. You can also send us any questions or comments to our Twitter or Facebook accounts.

When solar advocates wave Value of Solar slogans, remember what they really are – coupons for individuals that flow to for-profit companies, paid for by everyone else.

While the last thing the world needs is another energy acronym, there’s an argument to be made for Value of Mandated Service (VOMS). Utilities are under federal and state mandates to “ensure that electricity is available to customers all of the time, no matter the changes in demand due to weather or other factors.” Here’s another – Value of All Customers (VOAC). Both new acronyms may come in handy as we all work together to ensure energy fairness.