There is a wide range of utility experiences, but about 70% of solar activity is concentrated in the top 10 utilities as measured by our annual survey (www.sepatop10.org). The top 50 utilities encompass greater than 95% of the solar.
Solar Power and the Utilities - SEPA at SPI 2012
Julia Hamm | Solar Electric Power Association (SEPA)
What is the primary mandate of SEPA?
- The Solar Electric Power Association’s (SEPA) primary focus is on helping educate utilities on ways to integrate solar power into their energy portfolios for the benefit of the utility, its customers and the public good.
- With more than 1,000 utility and solar industry members, SEPA provides unbiased utility solar market intelligence, up-to-date information about technologies and business models, and peer-to-peer interaction.
What makes SPI so important and valuable to the solar industry?
With the rapid growth of solar power and all of the advances in solar technology, SPI’12 gathers everyone in one place to provide great business opportunities for solar companies, utilities, customers and others who are crucial to the success of increasing the amount of solar in our nation’s energy portfolio.It is a great opportunity to make new and lasting connections, to learn about innovative technologies, and to hear about best practices that have led to dramatic improvements throughout the industry.
What is the current status of solar industry in the US as it relates to utilities?
- There is a wide range of utility experiences, but about 70% of solar activity (as measured by number of systems or megawatts) is concentrated in the top 10 utilities as measured by our annual survey (www.sepatop10.org). The top 50 utilites encompass greater than 95% of the solar. But even those ranked 50-100 are still interconnecting 20-100 systems each per year, which could be significant for a small utility.
- Utilities are finding strong demand from customers, even as utility and state incentives decline. In some states this is accelerated by third-party leasing of solar systems to customers.
- Utilities are trying to determine how solar can be part of their business needs and solutions. Issues like a balanced generation portfolio that has lower long-term risks, utility ownership of solar, and in some cases, lower direct costs are part of that strategic planning.
Why are incentives so important to the solar industry?
- Historically incentives were the only way to close the cost gap and have solar approach an economic proposition for consumers. They helped drive the new industry, creating jobs and levelizing incentives for other energy generation sources.
- Today, rapidly declining costs and new third-party leasing business models have changed the conversation about incentives. Utility and state incentive programs are reducing the level of incentive commensurate with these changes, and in some locations are zeroing out.
- This isn’t necessarily a bad thing – the market is close to self-sustaining in some locations (w/ the federal tax credit in place). But that’s a broad brush in the most solar active areas (like the West) – there are certainly large parts of the U.S. that have and need incentives to keep expanding.
What are some of the challenges utilities face in regards to solar?
- High penetration solar - The local distribution system is becoming a limiting factor to some utilities in some areas – today it might be 25 lines that can’t absorb more solar (without compromising reliability or needing to invest in upgrades); in 2 years that number may double or triple. A dozen utilities are probably in this situation now, but that will grow over time.
- Growth of solar in new areas - A large number of small and large utilities have very little solar experience and activity. They need to avoid reinventing the wheel for their customers by learning from the solutions already implemented by other utilities.
- Customer solar experience – processing interconnection applications in a timely fashion, offering different customer types various solar programs and options, integrating solar into the customer billing and smart grid information avenues (bills, online accounts, etc).
How do you help utilities integrate solar power into their energy portfolios?
- The Solar Electric Power Association is an educational non-profit dedicated to providing utilities with unbiased information and forums about solar technologies, policies, and programs.
- SEPA provides the industry’s most focused utility solar educational events including Solar Power International, SEPA’s Utility Solar Conference, annual Fact Finding Mission, and monthly webinars to bring utility leaders together with one another and with the solar industry.
- SEPA also publishes best–in-class solar intelligence to help utility employees across departments make educated decisions about solar programs.
- And SEPA’s team of utility solar professionals help utility solar decision makers turn new technologies and markets into business opportunities.
What is the primary incentive for utilities to move towards solar integration and what more can be done to increase their stake?
- Utilities want to have balanced /diversified energy portfolios.
- Utilities want to be responsive to their customers’ solar interests.
- Utilities want solar costs to be fairly allocated among all customers.
- As solar costs decline, relative to other generation sources, utilities will naturally accelerate solar procurement.
What is the fraction of total utility generation currently contributed by solar power in the US and can you predict the growth rate of that fraction over the next 5 year?
- Nationally, of total electricity generation, it is 1% or less, but it is hard to track and calculate. The Energy Information Administration only counts utility-scale solar, excluding customer rooftop solar that lowers customers’ bills. (http://www.eia.gov/energy_in_brief/renewable_electricity.cfm)
- Locally, certain utilities, such as PG&E in California, are predicting 15-20% solar by 2020.
- There are currently over 200,000 solar generators out there, more than any other source by number – solar is a unique relative to traditional generation source. It is highly decentralized and growing rapidly across a variety of sectors – residential, commercial, utility, etc.
How does the US utility sector stand up compared to the rest of the world with regards to solar energy generation?
- U.S. utilities are more involved in solar processes and planning than elsewhere. Historically, utility decision-making often drives local market characteristics and speed, with regulatory (or equivalent) approval – how much is rooftop versus ground-mount, additional incentives, and over what time periods it is deployed. In the more advanced markets, customers are now driving the system and the utilities are reacting to managing that self-sustaining environment to operate the grid safely and manage the costs to other customers without solar. Even in these markets, utilities are still driving the large-project market through their planning processes though.
- SEPA recently went to Germany with utility executives and managers to study their solar markets and impacts. At the end of 2011 Germany had 28 GW of solar installed, to the U.S. 4 GW, in a much smaller areas with a much smaller population. From an operational and management perspective, the U.S. can learn from their experience. But they deployed it in a much different way with different incentives and policies that put the utilities in a more passive, reactionary role. This amount of solar deployment did not happen for free. German electric rates have increased 20-30% over the last 5 years just from the feed-in tariff costs, and will continue to do so as the electric grid is expanded to meet the demand. It is unlikely that sort of political and regulatory framework could be replicated nationally here – a state in the U.S. is more akin the country of Germany when it comes to policy frameworks.
If you had the power to build an ideal electric utility network in the US, what would you initiate now and how would it evolve over the next 5 -10 years?
- Per our trip to Germany, the German distribution grid was rebuilt in much of Eastern Germany after reunification, making it more modern and ‘stronger’ when it comes to absorbing distributed solar. As the U.S. market solar prices decline, utility operational needs will become more prevalent as the markets accelerate and the distribution grid limitations will become more and more of a limiting factor that needs addressing. Strategically investing in distribution grid planning and upgrades, where it makes sense, will help address this emerging concern.
- From a business perspective, the concern about lost revenue and the rate impacts of solar on customers without solar are an emerging trend. SEPA is expanding its work in this area to help bring constructive consensus, dialogue and solutions to the long-term needs of both the utility and solar industry. A solution framework for the interest of both parties needs to be resolved. The current path is unsustainable in the long-term.
Julia Hamm is the president and CEO of the Solar Electric Power Association (SEPA), a national non-profit that helps its utility members make smart solar decisions. Julia has strong relationships with individuals at utilities and solar companies worldwide, and is knowledgeable about solar programs, policies, barriers, and trends. She is a frequent speaker at regional, national and international conferences and has authored numerous articles on solar trends and utility solar programs. Prior to leading SEPA, Julia worked as a senior associate at ICF International where she supported the U.S. Environmental Protection Agency with implementation of its ENERGY STAR program.
In 2007 she was named one of the Top 10 Women in Cleantech by earth2tech, and she holds a Bachelors of Science in Business Management from Cornell University. She lives with her husband and son in a PV-powered energy efficient home that is certified by the Arlington County Green Home Choice Program in Northern Virginia.
About the Solar Electric Power Association
The Solar Electric Power Association (SEPA) is an educational non-profit organization dedicated to helping utilities integrate solar energy into their portfolio. From facilitating peer-to-peer interaction between utilities and the solar industry to hosting one of the industry’s leading educational forums on utility solar, SEPA is the go-to resource for unbiased utility solar information.
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