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.
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).
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.
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.