PV System Values: Transforming the PV Industry

Joseph McCabe, PE
October 01, 2012 | 4 Comments

PV systems can have more values than are currently being captured if the business model enables the utility to obtain more of the benefits. This article is about obtaining greater values from PV systems, such as energy storage, power factor correction, voltage support, frequency response, and other ancillary services. The proposed business model enables the control and capture of these utility services by means of utility inverter ownership.

Ownership

Part I of this article series discussed how PV and electrical storage research projects funded by the California Energy Commission ten years ago had challenges regarding using the stored energy, the dispatch signal, the security of the signal and who owned the signal. That experience, combined with a mistake this past January by the Sacramento Municipal Utility District (SMUD) helped to develop this new business model concept for the PV industry. This model divides the ownership of the PV system, where the utility can own the inverter and thus be able to control the many high value functions inverters can now provide to the electric grid.

Figure 1: Old ownership and new ownership business models.

Photo 1 below shows a concentrating PV system coupled with energy storage. By having the utility own the gear on the left side of this photo, the stored energy can be controlled and managed by the utility (again, see Part I of this article series for energy storage specifics).

Photo 1: Sumitomo Electric concentrating PV with redox flow battery (1 MW x 5 hours) with an energy management system. (Source of photo , copyright Sumitomo Electric Industries, Ltd.)

In January, SMUD bid on a Solar Shares project in which they would provide two inverters that SMUD had mistakenly overstocked. This sparked the idea that SMUD could own just the inverter on PV projects. The idea of inverter ownership provides the paradigm in which new values can be captured and enables cost reduction opportunities for utilities with large portfolios of PV generation. If the utility “owns” the inverter coupled to electrical storage, the signal for dispatching stored energy, the ownership of the signal and the security of the signal would be easier to manage. Other values discussed in this article can be obtained from added inverter functionality if the utility owns the inverter. Utilities should test this concept by developing project bids where they supply and own the inverters for PV projects.

Reactive Value

Power factor correction (also known as reactive power or kVAR) is now a high value-added function in large PV inverters. At the recent Solar Power International conference I investigated inverter manufacturing companies providing such functionality including Solectria, Advanced Energy (AE) and Gamesa Electric. Power factor correction can have enormous values by reducing customer billing costs as well as supporting utility operations. In one recent PV project evaluation for a southwest Colorado hospital, low power factors amounted to 50% of the utility bill. Increasing the power factor at a hospital can save lots of money, which can be better spent providing better health care. Power factors can be corrected by capacitor banks, but the ability of an inverter on a PV system to perform this functionality is more cost effective than an additional piece of dedicated expensive gear.

Power factor correction involves controlling kVAR and the real power by adjusting the output current phase angle and the amplitude. The best analogies I’ve seen can be made by using a mug of beer, the actual beer fluid being the power in kW, and the foam being the kVAR, the kVA being the amount of work the utility needs to provide in the form of the mug volume (see Figure 2). With beer, by reducing the foam, more beer can be provided and consumed; reducing kVAR, the kW more closely matches the kVA which means a better power factor.

Figure 2: Reducing kVAR is like reducing the foam on the mug of beer.

A more conventional (and confusing) representation of power factor is the power triangle as shown in Figure 3. By reducing the kVAR, the angle of the triangle, as well as the kVA (the apparent power) is reduced. Benefits to the utility from distributed power factor correction (reactive power correction) include but are not limited to increasing available grid capacities, reducing grid losses, and decreasing grid congestion.

Figure 3: Conventional representation of power factor correction.

The point of this power factor discussion is that greater customer and/or utility values can be provided by PV inverters. Similarly voltage support, frequency response and other ancillary values can be provided by PV inverters that support grid operations.

Advantages and Disadvantages

Utilities owning the inverters and Independent Power Producers owning the PV direct current (DC) subsystem present many challenges. In discussions with the Department of Energy (DOE) and SMUD very valid resistance to the business model have been presented. Issues associated with payment for direct current energy and the issues around curtailment or inverter availability, reliability, replacement, and maintenance, while surmountable, introduce risk compared to the benefits describe around enhanced controllability.

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4 Comments

Marvin Hamon, P.E.
October 5, 2012

It's an interesting idea to link ideas but you have to consider the target audience. Engineers and technology folks are pretty rigid in how we define things and trying to blur the lines makes us uncomfortable. We like binning technology.

It's probably a different story when presenting the same thing to a less technical business person, congress-critter, or lay person. So keep trying it out and see how different people respond.

Joseph McCabe
October 5, 2012

Thanks for the comments thus far, really appreciate the feedback!!!

Perhaps insight into one of my motivations for writing is in order; I try to change neuron connections of the reader. By using the word "Transformers" the hope is that the neurons will be closer linked to acceptable equipment for utilities, legislators, public utility commissions and other people influencing points of leverage. It also enables the title, in a play-on-words that isn't evident until the end of the article. I don't realistically think that the word "inverter" will no long be used; just trying to rearrange paradigms.

A publication that guides me is "Leverage Points; Places to Intervene in a System" published posthumous by Donella Meadows. Check it out (http://www.sustainer.org/pubs/Leverage_Points.pdf ), and feel free to publish anything of mine posthumous ~smiley~.

Best, Joe Mc.

Marvin Hamon, P.E.
October 4, 2012

Best reactive power analogy I have seen yet, I will have to borrow this when I am describing reactive power to non-engineers.

I think the idea of utility ownership of the inverters is interesting. Utilities are known to be very late adopters of new technology though. The only other technology they are using that might be in the same class as PV systems would be HVDC transmission systems. Those are used on a small scale but are at least in the system and they use larger inverters and rectifiers to convert the power from AC to DC and back to AC.

I don't think trying to classify inverters as transformers will get any traction. There is a big difference between a passive device like a transformer and an electronics based device like an inverter. There is some interesting work on devices called electronic transformers that might be closer to inverters but they are not yet in commercial power use that I know of.

Thanks for the interesting series of articles.

Dennis Houghton
October 2, 2012

While I agree some of the author's ideas, changing the name of a widely known electrical component to facilitate a marketing campaign is perhaps a bit of a stretch.
Most employees at a utility know the difference between an inverter and a transformer and that they are not at all the same thing. Inverters are high-speed electronic switches while transformers are passive inductive devices. Inverters typically produce PWM AC from DC and need transformers to provide utility grade power.

The author is correct that the utilities do not want to own millions of consumer located inverters and therefore millions of points of failure and subsequent maintenance and repair costs. If inverters were like transformers with long life and low maintenance, then the utilities would already claim them as theirs.

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Joseph McCabe

Joseph McCabe is a solar industry veteran with over 20 years in the business. He is an American Solar Energy Society Fellow, a Professional Engineer, and is internationally recognized as an expert in solar including new business models...