Utilities and Distributed Generators: Can’t We Be Partners?

I am about to interconnect with Pacific Gas and Electric in the most meaningful way.   I am going to generate some power for them.  I am going to help shoulder the burden of investing in generating facilities.

I would take more of the load if they would make it worth my while.  The system consists of eight Sunpower panels, but there is enough space on my south-facing roof for more than twice that number.

The system was sized to displace the maximum number of 14.5-cent kilowatt-hours (kWh) I pay for as a typical residential customer, while minimizing the number 1.9-cent kWh I would sell to the utility under current policy.  I have been using 12.3 megawatt-hours (MWh) of PG&E power annually. My solar system will generate about 9l8 MWh, saving me about $872 the first year.

I will soon be operating an 1800 DC watt solar photovoltaic system, an investment of $14,334 on behalf of myself, the federal government, and the ratepayers of PG&E.  The taxpayers’ stake is about $4,237, the approximate tax credit, and the ratepayers are contributing $935, an incentive rebate. That leaves $9,887 for me.

My utility bill savings will be about 10.4% annual return on my investment in the first five years, more later as the price of PG&E energy goes up. ::continue::

Why utility customers such as myself can’t put more money into their mini energy businesses is a matter of intense research at the National Renewable Energy Laboratory (NREL).  Ben Kroposki, NREL’s manager of distributed systems studies, led a recent Alta Terra Research webcast on the subject.

Kroposki said that the current limit of 15% in a utility generating portfolio is an old estimate that seriously needs to be reexamined.   A report by the Interstate Renewable Energy Council, Freeing the Grid, 2009 has shown that a 15% limit on distributed generation would provide only a fraction of the renewable generation most states are requiring.  California, with a limit on renewables of 5% of peak demand, is among the highest.  Only Utah allows enough renewables to meet its Renewable Portfolio Standard goal of 20%.

Southern California Edison has solicited 500 MW of photovoltaic generation in its service territory to be brought online over a five-year period.  The utility is working with NREL to study the effects on the reliability of their system at higher levels of penetration.  SCE has published a map that shows areas where large flat commercial roofs are available and penetration is less than 15%.  The utility is offering a “simple interconnect” in these areas.  For others, they are working with NREL to analyze on a case by case basis how PV capacity can be accommodated in higher penetration areas.

Kroposki of NREL finds little justification for the 15% penetration or 5% peak demand limit. 

“Fifteen percent is not a real technical limit.  It’s a conservative number that was picked in order to expedite the interconnection of small PV systems,” he said.  “In reality, as much as 100% or more of a transformer’s capacity might be the number.  Twenty to thirty percent of the energy in a system might come from distributed sources.”

The question, said Kroposki, “is how much utilities are willing to get those limits raised and what the restrictions are around that.”  Germany now has a penetration of about 10% and has put in place many of the best practices that would allow higher limits: next generation inverters allow utility control, substation upgrades, storage and building demand management.

I picked a local Davis, CA., company, Talbott Solar and Radiant, to install my system.  This is my vote local solution to our energy and climate change problems.

Mark Braly is president of the Valley Climate Action Center in Davis, CA., and was energy advisor to the mayor of Los Angeles doing the 1970s energy crises.

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Mark Braly was energy advisor to the mayor of Los Angeles during the 70s energy shock, author of the city's prize-winning energy plan, and president of a State of California non-profit corporation which made loans to renewable energy businesses. Now retired, he is a City of Davis, California, planning commissioner working on the city's zero-carbon program. He is president of the non-profit Valley Climate Action Center.

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