Originally published at ilsr.org.
The Institute for Local Self-Reliance invited clean energy advocates, electricity market regulators, utility employees, and energy democracy adherents to join a webinar exploring the technical, economic, and market implications of cost-effective combination of solar with energy storage.
The webinar –– which was hosted on Wednesday, July 18th @ 2 p.m. CT –– covered the powerful upending of the electricity market structure on the doorstep, the implications for centrally planned power systems, and the policies that align market rules with the democratizing power of solar and energy storage.
John Farrell, the Institute for Local Self-Reliance’s Energy Democracy initiative director (below) presented the results of his report, Reverse Flow: How Solar Plus Batteries Shifts Electric Grid Power from Utilities to Consumers.
There were a number of questions submitted during the webinar. We have included the questions, and John’s answers, below:
Q: I am so interested to listen today. My little city charges me $3/KW just to have the 13 KW system on my roof. They use arguments that seem uninformed and erroneous to justify the charge. There are only 3 solar producers in my town (the town owns the electricity company). They insist they are solar friendly and are just recouping what I cost them to ‘let’ me have solar.
A: Unfortunately, a lot of utilities have responded to distributed solar negatively, despite plenty of evidence of their value. Municipal and rural electric cooperatives, in particular, have often levied fees because they aren’t subject to regulatory oversight. On the flip side, these utilities are subject to local governance, either from a city council or a board of member-owners. Look for ways you can push back!
Q: Net metering originated in the United States, where small wind turbines and solar panels were connected to the electrical grid, and consumers wanted to be able to use the electricity generated at a different time or date from when it was generated. Minnesota is commonly cited as passing the first net metering law, in 1983, and allowed anyone generating less than 40 kW to either roll over any kilowatt credit to the next month, or be paid for the excess. Not 1983?
A: Excellent history of net metering! As a policy, you have it, but the story I was telling was the first (inadvertent) technical use of net metering when a meter spun backward due to the installation of solar on this Massachusetts home.
Q: I question the likelihood of many people in northern states cutting the cord to the grid. As an owner operator of about 80 PV systems in Massachusetts, we have seen February production close to zero for well over a week during real snowy winters. Is grid defection even a good idea or should utilities be encouraging storage as a means to strengthen the grid while providing DG owners financial benefits.
A: This is why in our report we focus on “economic defection” representing a significant shift in purchasing from the utility to self-supply, but not cord-cutting. In practice, the electric grid still has a lot of value as a backup supply but also in providing access to markets to recoup the value of distributed generation.
Q: I can’t come close to meeting my cost of operating solar for anywhere close to 3 cents per kWh. Suggesting such low costs undermines state level policy to provide fair compensation for value provided by solar
A: Our national model of 100% renewable prices is based on actual power purchase data at the utility level. The cost of and compensation for distributed solar is much higher, commensurate with its higher value in providing power at the point of consumption.
Q: Is there any research to support the potential offset of property taxes for hosting power plants with sales tax receipts, etc. from added local buying power (i.e. customer energy savings spent)?
A: Sales taxes are an interesting approach, but probably not predictable or sustainable enough for municipal budgets (after all, you only pay once). It’s probably time to consider revisiting property tax exemptions for renewable energy systems. Much like the federal tax incentives, the exemptions could sunset over a number of years.
Q: Do you think that the extra cost of a “smarter” battery (such as Sonnen or SunVerge) might be worth it for a home system? For selling “over the fence” and for long term battery health? Or get a smarter battery later because price coming down.
A: I’m not familiar enough with smart batteries to give you a clear answer, but can address this generally. Unless there’s a market for the value the battery can produce, it’s probably not worth adding features. For example, in the PJM market there was historically very high payments for frequency response, but few other regional electricity markets had accessible markets, especially for distributed storage. Evaluating the wear and tear on the battery for providing these services is also important. We address this issue in our electric vehicle report last year and provision of ancillary services puts much more wear on a battery than driving alone.
Q: Future webinar on local hydrogen production by electrolysis for putting extra summertime solar production to work?
A: I’m intrigued by local hydrogen storage if there are simple ways to consume it onsite. I’m a hydrogen skeptic if it requires new delivery infrastructure.
Q: Best way to get involved in state solar Public Utility Regulation? VT PUC has changed regs, and solar adoption has plummeted…
A: Find and join or support an organization that already intervenes. Sierra Club chapters, Citizen Utility Boards, Environment America chapters, or even Chambers of Commerce all regularly participate.
Q: If you were a utility executive, what would you do to address these challenges?
A: I’d pick up the phone and call Mary Powell at Green Mountain Power or Warren McKenna at Farmers Electric Cooperative or Luis Reyes at Kit Carson Electric Cooperative or Dale Ross of Georgetown Texas. All of these utilities are capturing the value of distributed energy, and some are even making money doing it.
Q: Would you recommend several Battery storage systems? Manufacturers?
A: I try to avoid product recommendations so as to maintain our neutrality in our policy work. I do support patronizing service providers that are cooperatives (although I don’t know of any in the battery manufacturing space).
Q: What are equitable policy solutions for solar+battery to ensure low-income households and communities aren’t left out?
A: Read up on inclusive energy financing as an important tool for offering access to capital without credit limitations. If used properly, it can also improve landlord uptake, which helps reach many more low-income residents. Additionally, community renewable energy is a key tool for folks that rent or can’t afford the upfront cost of renewable energy on their own property. We explore some program design strategies tomake community renewable energy accessible in a March 2017 blog post.
Q: Sorry if this is a bit long: in Illinois a key part of passing our most recent renewable energy legislation was support among low-income communities, and working with environmental justice communities generally is a critical part of movement-building. It seems like the up-front cost of renewable + storage systems is an obstacle to this being accessible for those communities. We see this issue in EE already. What kind of policy framework can make this accessible and beneficial for those folks? Can we layer storage on top of existing community solar or low-income solar programs?
A: See above response in addition to one other thought: Clean Energy Group has modeled how energy storage in affordable housing complexes in Illinois could sharply reduce the payback for solar because of avoided demand charges.
Q: Has a state legislature actually issued a moratorium on gas power plants? Isn’t this the role of the DPU or PUC?
A: No state legislature has yet, but when you have an urgent policy need, there’s no sense in putting all your gas moratorium eggs in one basket!
Q: Great presentation, ty – looking forward to reviewing the report. Do you know of any examples where individual residential or commercial customers are joining forces to create their own microgrid?
A: Sadly, no. As we covered in our Mighty Microgrids report, the regulatory barriers to connecting customers across public right-of-way are very steep. If you have a campus of buildings all belonging to the same electric customer, it’s relatively easy. If you have homes or businesses separated by a street, it’s exponentially more complex.
Q: Are you aware of any Community Solar/Storage projects that interconnect with a cluster of homes/users that have integrated demand response and smoothing? If so what are your thoughts?
A: I love the idea, but most community renewable projects have been standalone, with the sharing being done via billing, not actual electrons. See above reply re: microgrids for some of the regulatory barriers. That being said, there’s no reason that community solar couldn’t in general incorporate storage. It’s a great size to capture economies of scale.
Q: As adoption increases, what is the potential to use electric vehicles (and perhaps other sources of battery use) as a means of energy storage and have a value added proposition for vehicles?
A: It really comes down to the chicken-and-egg problem of vehicle-to-grid technology. Utilities and utility regulators haven’t created the market or infrastructure access for vehicles to plug in and supply power and electric vehicle manufacturers don’t cover such behavior under the car warranty. Additionally, vehicle owners do need to consider battery wear-and-tear. We discuss more in our electric vehicle report, Choosing the Electric Avenue.
Q: Here in Northern, CA Santa Rosa. We have 5500 residential property owners having to rebuild after wildfires last Fall and as we advise people to rebuild with new EE Title 24 code and adding solar we are not confident on advising to install batteries at this time. Primarily because of significant installation costs we are seeing. Thoughts?
A: There are a lot of potential pieces to this question and I’ll try to hit them all. A few questions:
- Have you gone out for a bulk purchase bid? Solar United Neighbors and other buying cooperatives have been able to lower solar costs by 20-25%, and I’d expect bulk discounts for storage, as well. (Disclosure: I serve on the board of Solar United Neighbors)
- What kind of electric rate structure will customers be on? Even if batteries are expensive, they may have a lot of potential to increase the value of a solar installation. Clean Energy Group modeledstorage for commercial customers in California under the new Net Metering policy regime and found that it restored much of the lost payback.
- Does Sonoma Clean Power offer incentives for residential electrification? Sacramento’s municipal utility recently introduced large rebates to support home electrification.
- Some customers may pay the premium even without the payback simply to have resiliency.
Q: In greater Philadelphia, there’s talk of large-scale pumped hydro storage. Installed at defunct coal mines. This could double storage for PA. You didn’t mention pumped hydro storage for rest of country. Is this happening in other states as well?
A: In this report we were mostly focused on distributed storage, so pumped hydro was unfortunately left out. It’s a very intriguing re-use of an abandoned mine. I’m also a fan (though haven’t seen it in practice) of the notion of using electrified rail cars filled with gravel and running them up- and down-hill.
Q: How should energy coops navigate this changing space?
A: It depends on the type of cooperative you mean. If you’re a cooperative solar installer network, likeAmicus Solar, then I’d say dive into this growing market. If you’re a rural electric cooperative, it’s more complex. These utility companies have several significant barriers (including a lapse in democratic practices) to making the pivot to clean energy, but several have led the way. We’ve done podcast interviews with several: Midwest Energy, Kauai Island, Farmers Electric Cooperative.
Q: Let’s say I am willing to invest in a solar/storage system. Perhaps I have an EV or just want to reduce the amount of electrical energy I purchase from the Utility. Let’s also say, I will use all I produce so there is no need to put energy back on the distribution lines, but I don’t want to “cut the cord”. I still need the utility to be there.
This begs a bunch of issues:
- What changes to my rate or tariff can the utility place on me for my actions?
- How can the utility manage services, cost effectively, at the fringe (the edge of the distribution network) if a bunch of DERs begin to operate in the same area?
- What incentive will the Utility have to manage those services (line maintenance, customer service, demand response, etc.)?
- How can I know what the effect of Utility rate and service changes will be on my solar/storage investment?
In one way, I see installation of my personal DER to be in the same category as the natural gas peak power plant development/investment. As John notes, the economic or cost benefit of a gas peaker may be questionable in a matter of years. Similarly, the Utility could render my DER installation questionable in a matter of years, too… So, what is a DER enthusiast to do? … “just-sayin” (to be a bit Minnesotan here) …
A: All energy investments, centralized or distributed, do carry some risk. Just ask solar customers in Nevada, who weathered the cancellation of net metering, only to have it restored months later. In general, it’s a reasonable assumption that existing customers will get grandfathered in to any major policy changes. That being said, your municipal or rural electric cooperative can do anything it wants to your rates and your investor-owned utility can do whatever regulators allow.
As to what utilities can do, I’d suggest they seriously and honestly start evaluating the value and costs of distributed energy resources. Most have done nothing more than a revenue analysis, which tells them that–sure enough–when a customer installs solar they sell them less electricity. Few have been willing to account for the value that might provide. Each utility is going to be different, and there may be differences based on location for a particular utility. But any good policy will have to start with an honest accounting of how customer-owned generation and storage affects the grid positively and negatively, and we’ve rarely seen that yet.
This article originally posted at ilsr.org. For timely updates, follow John Farrell or Marie Donahue on Twitter or get the Energy Democracy weekly update. Also check out over 50 episodes of the Local Energy Rules podcast!
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