DISTRIBUTED SOLAR GENERATION: VALUE AND PRICING

Transcription

1 DISTRIBUTED SOLAR GENERATION: VALUE AND PRICING AMERICAN PUBLIC POWER ASSOCIATION Anaheim, CA September 17, 2018 Ashley C. Brwn Executive Directr, Harvard Electricity Plicy Grup Harvard Kennedy Schl Harvard University 1

2 PART 1 PRICING ISSUES: PROS AND CONS OF NET METERING 2

3 Histric Basis fr Pricing Generatin A. Csts B. Market Net Metering is Neither 3

4 Benefits f Net Metering A. Strng Incentive fr Increasing Market Penetratin B. N Emissins in Energy Prductin C. Cmplements Reservirs (Imprtant Where Hydr Predminates) D. Prfitability fr Slar Cmmercial Interests 4

5 Cns f Net Metering A. Crss Subsidies A. Paying Retail, Delivered Price fr Whlesale Energy B. Slar Hsts D Nt Pay Their Share f Demand, Transmissin and Distributin Csts C. Scial Regressive Impact D. Disincentive fr Prductivity and Efficiency (e.g. Batteries, Directin Shifting Panels, Smart Inverters and System Supprt Services) (cntinued ) 5

6 Cns f Net Metering A. Crss Subsidies (cntinued) E. Discurages Technical Innvatin F. Maintains Prices Elevated Over Underlying Csts G. Puts Mre Efficient Wind and Large Scale Slar at Cmpetitive Disadvantage H. Encurages Off Peak Prductin (Negative Prices in Sme Cases Califrnia Duck Curve) 6

7 New Trends fr Pricing Distributed Slar A. Three Part Tariffs (Kansas) B. Energy Only Net Metering (Texas) C. Recnfiguring Distributin Systems t Resemble High Vltage Systems (New Yrk and Califrnia) D. Dynamic Pricing E. Califrnia s Slar Mandate 7

8 Impact f Price Distrtins On Energy Efficiency On Slar Hst Behavir n Peak On RPS where Least Efficient Resurce is Paid the Highest Unjustifiable Reallcatin f Fixed & Demand Csts 8

9 PART 2 VALUE ISSUES 9

10 Benefits Claimed by Advcates f Value f Slar Apprach A. Avided Energy Csts B. Avided Capacity Csts (Generatin and Transmissin) C. Envirnmental Externalities D. Jbs and Ecnmic Develpment E. Hedging Fuel and Energy Csts and Price Vlatility F. Distributin System Benefits 10

11 Purpse f Value f Slar Studies Set Actual Price fr Slar DG; r Justify Paying High Price (e.g. Net Metering) Deviatin frm Histric Nrms: Cst f Service (except regarding cst f capital) Market Based Avided Cst 11

12 Methdlgy N Cmmnly Accepted Methdlgy Wide Variance in Cnclusins 12

13 Narrw Fcus f Value f Slar Studies Technlgy Specific N Cmparisn with Alternatives fr Attaining Value N Assessment f Risks f Technlgy Specific Fcus Impacts f SIP s 13

14 Value Ecnmic Energy Value Depends n Time f Prductin Mstly Off Peak Capacity Value Depends n Availability Cnsequences f Nn-Availability Hedge Value Depends n Cst and Callability High Price Culd Exceed the Risk t be Hedged Is it Really Callable? (cntinued ) 14

15 Value Ecnmic (cntinued) Transmissin Effects Distributin Effects Transactin Csts 15

16 Externalities in a Limited and Selective Way Avided Csts in a Generally Limited and Selective Way Energy Fuel Transmissin, Distributin, and Generatin Capacity Jbs/Ecnmic Develpment Transmissin and Distributin Lsses 16

17 Externalities Primary Justificatin fr High Price Rarely Weighs DG Against Alternatives fr Reducing Carbn Subjective Chice f Externalities Questinable Valuatins f Carbn Prices and REC s Overlks Effects f Intermittency Fails t Track Impact n Dispatch and Displacement (i.e. Real Time) Ignres Scial Impact (e.g. Regressive Nature f Net Metering) Distrts Carbn Prices 17

18 Jbs and Ecnmic Develpment Highly Mypic View N Cnsideratin f Jb Impact f Chsing High Cst Technlgy Jb Impact f High Priced Electricity Fact that Mst Slar Manufacturing is Abrad Lss f Mining Jbs 18

19 Fuel and Energy Price Cnsideratin Lng Term Price Frecasts: Ntriusly Unreliable (MN vs ME: re annual adjustments) 19

20 Generatin Capacity Cnsideratins Fails t Fully Reflect Intermittency Fails t Fully Reflect Slar DG s Nn-Cincidence with Peak Demand Fails t Recgnize Nn-Callable Nature f Slar DG 20

21 Transmissin Capacity Cnsideratins Ignres Lumpiness f New Transmissin Ignres Scarcity f Right f Way 21

22 Distributin Issues Often Ignres Bi-Directinal Flw Issues Often Ignres Transactin Csts Ignres Revenue Attritin Issues with Net-Metering Ignres Planning Issues 22

23 Cnclusins A. Preferential Pricing fr Distributed Slar A. Distrts Market Prices B. Fails t Pass n t Cnsumers the Full Declining Csts f Slar Panels C. Highest Cst, Least Effective Means f Reducing Carbn Emissins D. Dilutes Energy Efficiencey Price Signals E. Transfers Wealth frm Less Affluent t Mre Affluent Custmers F. Discurages Technlgical Prductiviity and Gains in Slar Energy i. MIT Study Harms Slar Energy in Lng Run 23

24 Value f Slar Theries A. Highly Subjective B. N Generally Acceptable Methdlgy fr Valuatin C. Lack Fundatin in Histric Energy Pricing (Csts r Market) D. Never Technlgy Neutral E. Lacks Granularity Required t be Accurate 24