Published on June 3rd, 2015 | by Important Media Cross-Post8
Distributed Solar Helps Lower Peak Demand Electricity Prices
June 3rd, 2015 by Important Media Cross-Post
Originally published on Cost of Solar.
We’re bullish on rooftop solar, and it’s not only because residential solar can slash electricity costs, boost property values, deliver a great return on investment (ROI), and decrease air pollution and greenhouse gas emissions. Sure, those are all great reasons for considering going solar at home, but it turns out that rooftop solar can also deliver dividends for everyone on the grid, regardless of whether or not those other homes are solar powered.
According to the Institute for Energy Economics and Financial Analysis (IEEFA), a research organization that analyzes financial and economic issues related to energy and the environment, installing efficient rooftop solar arrays can help reduce peak energy prices for every ratepayer in the region. The article references a recent report from Sanford Bernstein & Co., a leading investment research firm, which saw a correlation between the amount of solar on the grid and peak demand pricing hours:
“Bernstein lays out the supporting research in a reported published last month that found that the rapid increase in the amount of solar PV available on the electricity grid in California—a seven-fold expansion in only four years, from 0.7 gigawatts in 2010 to 4.8 GW in 2014— had helped reduce system loads so much that peak prices were put off until later in the day, when demand was lower. Lower demand means lower prices.” – IEEFA
Another rooftop solar study, from the energy research firm Pecan Street Research Institute, was referenced in PV Magazine two years ago as having found that west-facing solar arrays in Texas reduced peak demand from the grid in the summer by up to 65% (as compared with south-facing arrays, which reduced demand by 54%).
“Residential solar systems have understandably raised concerns about their impact on electric reliability. These findings suggest that rooftop solar systems can produce large summer peak reductions that benefit utilities and customers alike without requiring customers to change their behavior or sacrifice comfort.” – Brewster McCracken, Pecan Street CEO and lead author of the report
A study released by Clean Power Research in 2012 also found that solar had additional benefits beyond just those delivered directly to homeowners through clean affordable electricity, stating that “solar power in New Jersey and Pennsylvania delivers value to the electric grid that exceeds its cost by a large margin.”
Essentially, when home solar arrays are feeding their excess electricity into the utility grid, they are helping to lower the market prices for electricity by reducing the overall peak demand on the grid during those hours, as utilities don’t need to generate or purchase as much energy to cover peak energy hours. The report also found that rooftop solar, acting as a distributed energy system, could help prevent power outages and rolling blackouts in certain regions, and in effect, strengthen the grid.
The results of the study, which looked at the value of distributed solar in areas with “modest” solar penetration (equal to about 15% of utility peak load) in the area, concluded that rooftop solar can deliver a range of benefits by offsetting some of the conventional power needs, including:
- Lowering conventional electricity market prices due to reduced peak demand
- Serving as a valuable price hedge by using a free, renewable fuel rather than variably-priced fossil fuels
- Avoiding costs of new transmission and distribution infrastructure to manage electricity delivery from centralized power plants
- Reducing the need to build, operate and maintain natural gas generating plants
- Reducing outages due to a more reliable, distributed electric power system
- Reducing future costs of mitigating the environmental impacts of coal, natural gas, nuclear, and other generation
- Enhancing tax revenues associated with local job creation, which is higher for solar than conventional power generation
As stated in the IEEFA article linked to above,
“In addition to driving energy market prices down, it brings environmental benefits by reducing dependence on fossil fuels, and it acts as a hedge against fossil-fuel price spikes.
It’s in every ratepayers best interest. And that’s the truth.”
Installing a home solar system can be a boon to not only your own personal finances through both long- and short-term savings on electricity costs, but also to your regional grid and the other utility customers by helping to reduce peak energy demand, and hence peak energy costs.
Image by Thomas Williams under CC 2.0 license.