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More Insights Into Solar and Utilities: Large-Scale Integration, Self-Ownership, and Net Metering

Utilities integrated nearly 2.4 GW (AC) of solar electric capacity in 2012, a 61 percent increase from the ~1.5 GW that was added in 2011 and more than triple the 781 MW added in 2010, according to the U.S. Solar Electric Power Association (SEPA). The group officially released today the full version of its sixth annual Utility Solar Rankings report, which analyzes the amount of new solar power interconnected by U.S. electric utilities.

SEPA tracks more than 300,000 solar projects, which amount to 6.1 GW installed across the U.S. The group's 2012 report spans more than 96 percent of the national solar electric power market and more than 260 of the most solar-active utilities. A few weeks ago we offered a sneak-peek at some of its findings, including the utilities who installed the most solar capacity (Pacific Gas and Electric was #1 yet again by a long shot) and the utilities making the most strides on a watts-per-customer basis (a lot of municipal utilities, led by ones in Ohio and Hawaii).

Diving deeper into SEPA's full report illustrates some new nuggets:

  • Utilities purchased more than 1.1 GW of large-scale solar in 2012, defined as projects at least 5 MW in size. Large-scale solar made up 46 percent of all annual solar capacity, a 160 percent surge from 2012 (435 MW). With the first group of big concentrating solar power (CSP) projects expected to finally start coming online this year totaling 750 MW, large-scale projects alone should exceed 2012's entire total of utility-integrated solar capacity.

    Note that in addition to the large-scale and net-metered projects (listed below) there's a small slice of smaller-scale, non-net-metered projects that are residential or commercial in scale (less than 5 MW) that sell electricity back to the utility, sometimes by a feed-in tariff or by FERC mandate.
  • Utilities owned 12 percent of large-scale solar capacity and purchased the remaining 88 percent through power purchase agreements, which appears roughly equal to what it was in 2012. For overall solar capacity, utility ownership was around 7 percent, slightly down from 2012. This distinction between utility-owned solar vs. installed watts that are located in a utility's area has been called out by some of our readers, who question just how committed utilities are to solar energy — particularly distributed solar energy.

    There are a number of reasons that a utility might choose to procure solar as opposed to owning it directly, points out Becky Campbell, senior research manager at SEPA. But the 12 percent utility ownership of large-scale solar "shows there's a commitment," she said. "They're making a commitment whether it's up-front capital or a long-term contract for the output."
  • Utilities interconnected nearly 90,000 net-metered projects totaling 1,151 MW-ac. Net metering accounted for more than 99 percent of newly installed systems in 2012, but made up slightly less than half (48 percent) of the total installed solar capacity. There are about 3.5 GW of net-metered projects around the country, accounting for about 60 percent of the cumulative market, and 80 percent of that is in just five states: California, New Jersey, Arizona, Hawaii, and Massachusetts.

    The heart of the debate over net metering, typically pitting customers vs. utilities, involves how utilities recover from infrastructure investments, and whether net-metered customers are contributing less to those capital expenditures and shifts that burden to other ratepayers. In small quantities that doesn't have a big impact, but it has a significant impact on big utilities like PG&E who have to integrate tens of thousands of NEM projects that are removed from that capital fund equation and potentially impact everyone's rates. Campbell noted many utilities are exploring alternatives to the NEM question, exploring the value of solar with a full study of all its costs and benefits, assigning a value of a solar "tariff" and using that as a different mechanism than net metering -- Austin Energy is an example of that.

Campbell also shed some light on an unexpected finding in this utility-solar study: Ohio, not exactly known for its solar resources, placed three utilities in the top 10 in terms of watts-per-customer. "We never would have suspected that Ohio would have such a strong presence," she said. The explanation is that all three are members of American Municipal Power, an association of more than a hundred utility members spanning Ohio and Pennsylvania and four other states, which has made a strong commitment to solar and encouraged its members to do the same. That top-down message from AMP's leadership seems to be influencing its members "to be a little more aggressive," she said.

One last factoid: 2.4 GW in utility-integrated solar electric capacity is roughly equivalent to eight natural gas combined cycle power plants.

Lead image: Tick mark under solar battery via Shutterstock

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