² Howard J. Wenger, Thomas E. Hoff , and Brian K. Farmer, "Measuring the Value of Distributed Photovoltaic Generation: Final Results of the Kerman Grid-Support Project," First World Conference on Photovoltaic Energy Conversion Conference Proceeding (Waikaloa, Hawaii, December 1994), p. 793; D. Keane, Grid-Support Photovoltaics: Summary of Case Studies, prepared for Pacific Gas & Elecric Company, San Ramon, Calif., 1994.
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³ See E. Prabhu, "Finding High Value for Grid-Connected PV: Southern California Edison's Innovative Solar Neighborhood Program," paper presented at the American Solar Energy Society Annual Conference, Minneapolis, Minn., 1995; J. Oppenheim, "PV Value Analysis: Progress Report on PV-COMPACT Coordinating Council's Consensus Research Agenda," paper presented at the American Solar Energy Society Annual Conference, Minneapolis, Minn., 1995; Howard J. Wenger, Thomas E. Hoff, and Brian K. Farmer, "Measuring the Value of Distributed Photovoltaic Generation: Final Results of the Kerman Grid-Support Project," First World Conference on Photovoltaic Energy Conversion Conference Proceedings (Waikaloa, Hawaii: December 1994).
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⁴ For intermittent resources such as solar energy, capturing these benefits requires the use of batteries or other on-site storage.
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⁵ The avoided cost rate is roughly equivalent to a wholesale rate, except that it is administratively determined. In the future, the avoided cost rate is likely to be supplanted by some wholesale market rate.
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⁶ The vast majority of electricity meters used for residential and small commercial customers (nondemand customers) are bidirectional, and require no modification to measure the flow of energy in either direction. Although new metering technologies may or may not share this attribute, the installed base of bidirectional meters is extremely large and is unlikely to be swapped out for new meters in the absence of some economic imperative.
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⁷ A 1 kW PV system will produce roughly 140 kWh/month. Replacing eight 100-watt incandescent bulbs that are used 8 hours a day with 23-watt compact fluorescent lights will save about 150 kWh/month [8 bulbs x (100 watts - 23 watts) x 8 hrs/day x 30 days/month x 1 kW/1000 watts = 148 kWh/month].
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⁸ In general, the greater the differential between retail and avoided cost prices; the larger the system; and the lower the direct PV-to-load percentage the greater the value of net metering. A study by the Pacific Energy Group for the Sacramento Municipal Utility District (SMUD) found that a range of 0-45% increase in annual bill savings from net metering. For a typical 2 kW system, the increase in annual bill savings was 18%. See Howard Wenger, Tom Hoff, and Donald E. Osborn, "A Case Study of Utility PV Economics," American Solar Energy Society Conference Proceedings (Washington, DC: American Solar Energy Society, 1997), p. 4.
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⁹ Also, in several regulatory proceedings around the country-including California, Iowa, Maine, Nevada, and New York-utility consumer advocates have submitted written or oral testimony in support of net metering.
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¹⁰ Yih-huei Wan, "Net Metering Programs," NREL Topical Issues Brief, NREL/SP-460-21651, National Renewable Energy Laboratory, Golden, Colo., December 1996, p. 9-14.
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¹¹ See Minnesota Department of Public Service, 1997 Electric Utility Qualifying Facilities Report (St. Paul: Nov. 5, 1997), obtained from Jim Green of NREL's National Wind Technology Center. All 110 of the listed facilities were wind energy systems.
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¹² Part of the uncertainty regarding the number of net-metered facilities stems from the fact that many customers-particularly those with solar PV systems-apparently choose not to inform their local utility that they are generating some of their own electricity. These customers are benefiting from de facto net metering-an unintended consequence of the fact that the vast majority of electricity meters used in residential applications happen to be bidirectional, so that customers can install their systems without the utility's knowledge or consent and enjoy the benefits of net metering. Anecdotal evidence suggests that these customers choose not to inform the utility because of the administrative and/or cost burden associated with obtaining the utility's approval and/or the fear that the utility would not allow them to interconnect.
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¹³ In fact, the only states in which efforts to enact statewide net metering laws have failed are Hawaii, Iowa, and Colorado-and in all three of these states, net metering is already available in some form from some utilities.
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¹⁴ The more charitable view regarding the utilities' reluctance to cede control over interconnection is that utilities are very conservative and extremely protective regarding the safety and integrity of "their" utility grid. The less charitable view is that utilities use their control over interconnection to stifle competition from customers interested in generating their own electricity instead of buying it from the utility. Most likely both these views are correct, with the balance varying substantially from one utility to the next.
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¹⁵ Comprehensive Electricity Competition Act (proposed), Section 303(c) & (d), text available on the Internet at Web site: http://www.hr.doe.gov/electric/cecp.htm.
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¹⁶ PG&E Advice 1549-E to the Public Utilities Commission of the State of California, Nov. 21, 1995.
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¹⁷ Some utilities claim to be uncomfortable relying on the electronic protective relays built into new inverters, favoring instead the old-fashioned mechanical relays with which they are more familiar. There appears to be little legitimacy to their arguments that the mechanical relays provide superior reliability or performance.
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¹⁸ Permitting fees are often tied to the value of the building improvement.
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¹⁹ There is a growing lexicon to describe nonbypassable charge programs imposed on ratepayers to recover stranded costs and benefits, including competition transition charge, system benefits charge, public purpose charge, and transfer trust charge. Although the words differ, the net function of these programs is generally the same: to recover funds from ratepayers as a result of a restructuring settlement.
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²⁰ So far, nine states-California, Connecticut, Illinois, Massachusetts, Montana, New York, Pennsylvania, Rhode Island, and Wisconsin-either already have established or have proposed nonbypassable competitive transition charges (CTCs) to support utility stranded cost recovery and nonbypassable public purpose program charges to support social, environmental, and other public benefit programs.
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²¹ John Nimmons, John Nimmons & Associates, "Impact of California's Competitive Transition Charges on Distributed Resources," Conference Proceedings, California Alliance of Distributed Energy Resources (Olympia, Wash.: September 1997).
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²² The apparent exemption for residential PV systems is contained in Section 371(c) of the California Public Utilities Code, which states: "Nothing in this section [imposing the CTC on all customers subject to changes in usage] shall be construed as a limitation on the ability of residential customers to alter their pattern of electricity purchases by activities on the customer side of the meter." Commercial and industrial PV systems could argue that their PV systems qualify as "installation[s] of demand-side management equipment or facilities, energy conservation efforts, or other similar factors." Public Utilities Code Section 371(b). Making such an argument may lead to litigation.
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²³ Ironically, the California CTC is in place during the same transitional period that California's Emerging Renewables Buydown Program funds are available, so that these two elements of the same restructuring law are at odds with one another: The law spurs renewable energy development by providing financial incentives for renewable energy investments, while at the same time it stifles renewable energy development by requiring renewable self-generators to pay the CTC on the electricity they generate.
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²⁴ Solar Energy Industries Association (SEIA) Chapters in Arizona, California and Florida, Education of Homeowner Associations on Solar Energy, draft proposal, Sacramento, Calif., 1998.
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²⁵ Solar Energy Industries Association (SEIA) Chapters in Arizona, California and Florida, Education of Homeowner Associations on Solar Energy, draft proposal, Sacramento, Calif., 1998, p. 1.
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²⁶ Among the states prohibiting or limiting CC&Rs that restrict solar access are Arizona and California (discussed below), Colorado, Hawaii, Indiana, Massachusetts, and Nevada. See Chris Larsen, Henry Rogers, and Larry Shirley, National Summary Report on State Regulatory Incentives for Renewable Energy, prepared for the Interstate Renewable Energy Council by the North Carolina Solar Center, Raleigh, N.C., 1998, p. 90-95.
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²⁷ Solar Energy Industries Association (SEIA) Chapters in Arizona, California and Florida, Education of Homeowner Associations on Solar Energy, draft proposal, Sacramento, Calif., 1998, p. 1
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²⁸ Solar Energy Industries Association (SEIA) Chapters in Arizona, California and Florida, Education of Homeowner Associations on Solar Energy, draft proposal, Sacramento, Calif., 1998, p. 2.
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²⁹ California Civil Code Section 714.
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³⁰ The legal maxim was "Cujus est solum, ejus est usque ad coelum et ad inferos," which translates "To whomsoever the soil belongs, he also owns to the sky and to the depths." See Thomas Starrs, "Solar, Wind and Geothermal Energy,"in Sustainable Environmental Law (St. Paul, Minn.: West Publishing Co., 1993), p. 748.
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³¹ See Chris Larsen, Henry Rogers, and Larry Shirley, National Summary Report on State Regulatory Incentives for Renewable Energy, prepared for the Interstate Renewable Energy Council by the North Carolina Solar Center), p. 89.
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³² Thomas Starrs, "Solar, Wind and Geothermal Energy," Sustainable Environmental Law (St. Paul, Minn.: West Publishing Co., 1993), p. 749-50.
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³³ Several municipalities have adopted this approach, including Boulder, Colo., and Los Alamos and Taos, N.M. See Thomas Starrs, "Solar, Wind and Geothermal Energy,"Sustainable Environmental Law (St. Paul, Minn.: West Publishing Co., 1993), with imposing additional fees and charges on distributed PV system, p. 750-51.
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³⁴ Large commercial customers and industrial customers typically pay demand charges (based on peak energy demand) as well as energy charges (based on total energy use).
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³⁵ Oregon Public Utility Commission, In the Matter of the Revised Tariff Schedules in Oregon Filed by PacifiCorp, dba Pacific Power & Light Company, Order No. 98-191 (May 5, 1998).
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³⁶ For further discussion of a national renewables porfolio standard (RPS), see Ray T. Williamson, "Appendix A: A Portfolio Approach to Developing Renewable Resources," Expanding Markets for Photovoltaics (Washington, D.C.: Renewable Energy Policy Project, 1998).
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³⁷ Arizona Corporation Commission, Electric Competition Rules A.A.C. R14-2-1600 et seq., Aug. 5, 1998, see Web site: www.cc.state.az.us/utility
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³⁸ For further discussion of buydowns, see Thomas J. Starrs and Vincent Schwent, "Government Buydowns for the Residential Market," Expanding Markets for Photovoltaics (Washington, D.C.: Renewable Energy Policy Project, 1998).
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³⁹ Arizona and Colorado are examples of states with line extension versus PV policies.
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⁴⁰ T.E. Hoff and M. Cheney, "An Historic Opportunity for Photovoltaics and Other Distributed Resources in Rural Electric Cooperatives," submitted to The Energy Journal, 1998.
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⁴¹ T.E. Hoff, H.J. Wenger, C. Herig, and R. W. Shaw, Jr., "A Micro-Grid with PV, Fuel Cells, and Energy Efficiency," presented at the 1998 Annual Conference, American Solar Energy Society, Albuquerque, N.M., June 1998.
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⁴² Details of the Administration's Comprehensive Electricity Competition Plan, including full text of the accompanying draft bill, are available on the Internet at the following Web site: http://www.hr.doe.gov/electric/cecp.htm.
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⁴³ The California legislature specified that at least 60% of the buydown funds have to be awarded to systems sized 10 kW or smaller, and an additional 15% of the funds to systems sized 100 kW or smaller. See California Energy Commission, Renewable Technology Program Guidebook, Volume 3: Emerging Renewable Resources Account (Sacramento: January 1998).
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⁴⁴ For discussion of a national renewables porfolio standard, see Ray T. Williamson, "Appendix A: A Portfolio Approach to Developing Renewable Resources," Expanding Markets for Photovoltaics (Washington, D.C.: Renewable Energy Policy Project, 1998).
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⁴⁵ For discussion of buydowns, see Thomas J. Starrs and Vincent Schwent, "Government Buydowns for the Residential Market," Expanding Markets for Photovoltaics (Washington, D.C.: Renewable Energy Policy Project, 1998).
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⁴⁶ This effort resulted in the preparation of a letter from a variety of stakeholders to the California Public Utilities Commission (PUC), asking the PUC to initiate the rulemaking proceeding. Accompanying the letter was a lengthy, detailed statement outlining distributed generation regulatory issues that the stakeholders believe "are integral to electric restructuring and to optimal [distributed generation] implementation." Draft letter from California stakeholders to Richard Bilas, President of the California Public Utilities Commission, June 5, 1998.
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⁴⁷ One indication of the perceived difference in clout is the array of financial interests that have taken an interest in distributed generation. For example, the 1997 conference of the California Alliance for Distributed Energy Resources' (CADER) was attended by representatives from Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Paine Webber. Few, if any, of these financial powerhouses have ever expressed a similar level of interest in PV technology.
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⁴⁸ See Henry Rogers, Chris Larsen, and Larry Shirley, National Summary Report on State Financial Incentives for Renewable Energy (Raleigh, N.C.: Interstate Renewable Energy Council & North Carolina Solar Center, July 1997); Chris Larsen, Henry Rogers, and Larry Shirley, National Summary Report on State Regulatory Incentives for Renewable Energy (Raleigh, N.C.: Interstate Renewable Energy Council & North Carolina Solar Center, December 1997). Most, but not all, of these incentives are available for PV technology.
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⁴⁹ For a more thorough discussion of these issues, see Thomas J. Starrs, "Regulating Innovation and Competition in Emerging Technology Markets: The Effects of Utility Participation in the Market for Remote Photovoltaic Systems," Ph.D. Dissertation, University of California at Berkeley, December 1996, p. 83-92.
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