Sunday, March 22, 2015

Maine Distributed Solar Valuation Study

The Maine Public Utilities Commission has released a study that gives a quantitative value for solar power produced in Maine. The study was in response to legislation passed last year. It focused on “distributed” solar, meaning solar that is located at or near the place where the power is primarily consumed, for example on the rooftops of homes and businesses. The study found that solar power provides a substantial public benefit. It provides evidence that Maine’s current energy policies are leaving the state behind, and leading to missed opportunities.

The study calculates the monetary value of the benefits of solar installations, which have a 25-year warranty and produce power over a 35-year expected lifespan. The study finds that the value of solar power produced in Maine is 33 cents/kilowatt-hour. In comparison, customers who put solar panels on their roofs only receive a credit on their bill worth about 13 cents/kilowatt-hour.

“The study confirms that solar power provides enormous value to Maine people and energy users,” said Dylan Voorhees, Clean Energy Director for the Natural Resources Council of Maine. “Solar provides critical energy diversity as well as environmental benefits. However, for Mainers to reap more of those benefits, we need more effective state solar policies.”

The analysis confirms that solar power provides multiple, quantifiable benefits well beyond the basic unit of energy produced from a solar panel. These include:
  • Reduced electricity prices, due to displacing more expensive power sources;
  • Less air and climate pollution;
  • Reduced costs for our electric “grid” system;
  • Reduced need to build more power plants to meet peak demand; and
  • More stable prices and greater energy security from a diversified energy supply.
Together, these benefits mean each kilowatt-hour of solar power is worth more than twice as much as our outdated energy policies consider.
[The study includes 13 cost-benefit factors in five categories. The first eight are Avoided Market Costs and are relatively straightforward bill factors: Avoided Energy Cost, Avoided Generation Capacity Cost, Avoided Residential Generation Capacity Cost, Avoided Natural Gas Pipeline Cost, Solar Integration Cost, Transmission Delivery, Avoided Transmission Capacity Cost, Avoided Distribution Capacity Cost, and Voltage Regulation. The last five are Societal Benefits more commonly regarded as externalized factors but they are emerging as important parts of the solar value equation: Net Social Cost of Carbon, Net Social Cost of SO2, Net Social Cost of NOx, Market Price Response, and Avoided Fuel Price Uncertainty.

The study provides a calculated one-year value and a 25-year levelized value for CMP customers. Avoided Market Costs are valued at $0.09 per kWh for one year and at $0.138 if levelized over 25 years. The Societal Benefits are valued at $0.092 per kWh for one year and at $0.199 per kWh over 25 years. That puts the one-year total value at $0.182 per kWh and the 25-year value at $0.337 per kWh'...
“This study confirms what our 4,500 solar customers already know—solar electric systems deliver a powerful economic and environmental return on investment that is currently under-valued by Maine’s solar policies,” said Phil Coupe, co-owner of Revision Energy. “Many other states have reached the same conclusion about the high value of solar and in response, they have implemented strong solar policy initiatives to encourage public and private solar investments. We hope this study lays the foundation for Maine to adopt policies similar to those in New Hampshire, Massachusetts, and elsewhere, that rapidly increase access to solar by addressing barriers and doing more to spur the solar market.”

“We are pleased that the study included a reasonable accounting of the pollution reduction benefits of solar power,” said Ed Miller, Senior Vice President with the American Lung Association of the Northeast. “Climate change and air pollution from power plants negatively impact the public’s health. Our energy policy and health policy are tightly connected. The air quality benefits documented in the report also represent potential health care savings for businesses and individuals in Maine.”

The study undervalued solar power in one specific way: it failed to account for any reduced costs of the distribution grid—the smaller scale wires that carry power throughout communities. Utility data has shown that this benefit is tangible, but the value has been disputed. When a value is ultimately included for this, it would increase the benefit of solar further.

The study also did not consider the job creation benefits of solar because these were beyond the scope of the PUC’s capacity to analyze. However other studies have found that every megawatt of solar power installed creates one or two direct jobs. (For context, Representative Gideon has sponsored a bill that would lead to nearly 200 megawatts of new solar—or roughly 300 new jobs.)

“We really need to pay attention to Maine’s farms and businesses, which are at a competitive disadvantage due to our state’s current policies,” said Vaughan Woodruff, owner of Insource Renewables in Pittsfield, Maine. “In states where businesses that produce solar are compensated at its true value, we see significant private investment that is fueling massive job growth and strengthening local economies. Representative Gideon’s bill would be a strong step towards solar policy in Maine that recognizes the benefits of solar to all Mainers.”

Solar power is undergoing a renaissance across the country and region, as prices have come down by more than 50% in the last five years.

The study used Maine-specific data and a sophisticated model to quantify the unique benefits that come from solar—including producing power at “peak hours” (e.g. during the daytime on hot summer days) when power from the grid is most expensive for all ratepayers.

In 2014 the Legislature passed, “An Act to Support Solar Energy Development in Maine,” which, among other things, directed the Public Utilities Commission to conduct an analysis of the quantifiable value that distributed solar in Maine would provide. The analysis was modeled after dozens of similar “value of solar” studies that have been conducted in other states. The goal was to quantify the net benefits to the public and ratepayers that each kilowatt-hour of solar provides.

The study shows that net-metering has an overall benefit to Maine people. Net-metering is the policy, used in Maine and many states, that allows homes and businesses with solar arrays to be credited for power they provide to the grid at the same rate they pay for power they take from the grid. Electric utilities in Maine and elsewhere have attacked net-metering because they have undervalued the benefits that solar provides. The Maine study, like others conducted around the nation, provides evidence that net-metering is providing a substantial public benefit.

“Despite these significant benefits of solar, Maine lags far behind neighboring states, and the country as a whole, on solar installations per capita and on solar job creation,” said Voorhees. “Maine is the only state in New England that lacks a specific policy to spur the solar market and reduce barriers so we can provide access to solar for more homeowners and businesses. The study confirms that it is time for Maine to catch up.”

Natural Resources Council of Maine (NRCM)
Press Release dated March 3, 2015

No comments:

Post a Comment