From outdated technical rules to local permitting to incentive policies, there are opportunities to increase the potential for local solar power.
A prominent “technical” barrier is the so-called “15% rule.” It’s a rule adopted in many states that says that distributed renewable energy systems can only make up 15% of the peak energy demand on the portion of the electricity system that serves residential areas (called the distribution system). To go beyond the 15% limit, proposed solar power projects would have to complete complex and costly engineering reviews to connect to the grid, making more solar cost-prohibitive.1
The 15% rule was first adopted in California’s “Rule 21” for interconnecting distributed generation in the year 2000. The 15% rule comes from an assumption and a simple calculation. It’s assumed that the daytime minimum load on a distribution
circuit (one strand of the local electric grid) is approximately 30% of the peak demand. This 30% represents the most solar capacity that could be installed on a distribution circuit without potentially producing more than the circuit’s load. The 30% was divided in half as a safety margin, making the threshold 15% of peak load.
The 15% rule now governs most state distributed generation policies (and is part of FERC’s Small Generator Interconnection Procedures) and has started to create problems in states with the most local solar power development, including Hawaii and California.
However, the 15% rule may be too conservative. Research from the federal Department of Energy suggests that daytime minimum loads are likely closer to 50% of peak load, rather than 30%. This means that a more appropriate (and still very conservative) threshold for unintentional islanding is closer to 25% of peak load, rather than 15%.
Raising the threshold seems reasonable because potential impacts of high distributed generation penetration (such as maintaining a constant voltage on the grid) have not proven out.2 In particular, there are several illustrations of the ability of the distribution grid to handle very high portions of solar PV generation, much more than the 15% rule.3
Energy storage is among other potential technical solutions to the 15% (or 25%) rule. Electric vehicle batteries or other storage connected to the distribution system could absorb some portion of solar electricity at periods of high production and low demand, and push the power back into the grid when it’s needed. Research at the Department of Energy and many private companies continues to search for ways to maximize the penetration of distributed solar power with storage and electric vehicles.
Local permitting rules significantly increase the cost of installing solar projects, especially on residential property. In a study released in early 2011 by solar installer SunRun, permitting costs represented 8-10% of the total
project cost ($6.40 per Watt) of typical residential solar projects (3-4 kW). At $4.00 per Watt (our estimate for the best possible residential solar installed cost today), these permit costs would be 16% of project costs for a 4 kW array. If nothing changes by 2018, when solar installed costs could fall to $2.41 per Watt, unchanged permitting policies would represent 26% of the price of a 4 kW solar array.4
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