TODAY’S STUDY: UTILITIES BUYING MORE SUN

Get ready for another onslaught by the enemies of New Energy. Once again, a paper has emerged claiming New Energy somehow creates more greenhouse gas emissions instead of reducing them. A ridiculous proposition that doesn’t even pass the smell test, it nevertheless has found a proponent.

Skepticism and even contrarianism are essential to democracy. Spirited debate is an elementary expression of liberty. But while most any opinion is licensed by the constitution, facts face a sterner test

It should come as no surprise that the vested Old Energy interests have found a credentialed academic like Dr. Herbert Inhaber to bend the facts their way. Those who remember the glory days of the tobacco industry know there are always people, even thoughtful and scientifically oriented people, who can find reasons and rationales for otherwise patently objectionable ideas.

Inhaber’s argument is that as more New Energy is added to the power mix on the grid, power system managers will burn more fossil fuels as back-up, increasing the production of GhGs.

According to Michael Goggin, the manager of transmission policy at the American Wind Energy Association, wind and the other New Energies affect emissions in 3 ways: (1) They replace electricity generated at fossil-fuel plants, (2) they create more emissions from those plants (on a per-unit-of-output basis) due to the use of fossil fuels as back-up, and they drive a transition from coal to lower emitting sources for grid back-up.

As the study highlighted below unequivocally confirms, Goggin’s first point is correct. Utilities are aggressively moving to solar. And U.S. government statistics show Goggin’s third point to be true. Utilities have made natural gas and wind their primary choices for new generation over at least the last 5 years. These two effects have a much larger impact on total GhGs than the use of fossils as back-up.

Brett Prior, a senior analyst at Greentech Media’s GTM Research, told Wind Energy Update that Inhaber’s study looked “fundamentally flawed” and that “the math is just plain wrong and his use of data is incorrect” because it draws on old information and cherry picks.

More importantly, Inhaber assumes utilities will continue to use a constant proportion of fossil fuels as back-up when, in fact, plans call for better transmission – already being built in places like California’s Mojave-Tehachapi region – that will integrate more New Energy from a wider range of sources instead of relying on Old Energy and the old ways.

Just as the tobacco industry had its last gasp before the shift away from smoking, those with vested interests are never going to toss the grid’s keys to New Energy and say, “you drive kid.”

But, as the report below demonstrates, even the managers of utilities who bear the profound responsibility for keeping the lights on and the air condition cooling now see the facts and realize the logic of New Energy is undeniable.

2010 SEPA Utility Solar Rankings
Becky Campbell and Mike Taylor, June 2011 (Solar Electric Power Association)

About the Report

SEPA‘s fourth Utility Solar Rankings report details the results of the yearly survey sent to hundreds of utilities in the United States of their annual and cumulative solar electric installations.

The annual rankings include new solar projects installed in 2010, and take into account large and small solar projects owned by customers, solar companies, or the utilities themselves that are integrated into the utility‘s grid, allowing comparisons against peer, regional, or national benchmarks. The cumulative rankings take into account all solar that was interconnected into the utility‘s grid through the end of 2010, including all prior years.

New efforts to expand and incorporate more utilities into this independent survey have been extremely effective, capturing a nearly complete picture of the U.S. solar market. Utility participation has increased 334 percent from 2007 to 2010, from 53 to 230 participating utilities respectively. As a result, the 2010 survey has captured an estimated 99 percent of the annual and 96 percent of the cumulative national solar market…Each of the Top 10 rankings includes both Solar Megawatts and Solar Watts-per-Customer in the following categories:

National

Regional
o Eastern U.S.
o Central U.S.
o Western U.S.

Utility Type
o Cooperative
o Investor Owned
o Municipal

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The report is broken down into four sections, beginning with overall Trends from 2010, followed by the National Solar Rankings for 2010. A chapter on Regional Solar Rankings looks at how utilities ranked when divided by Eastern, Central and Western regions.
Next, the report includes a section on Utility-Type Rankings, examining how the three major utility types (cooperative, investor-owned and municipal) ranked. The Appendix contains a list of definitions of terms commonly used throughout the report, information on the survey methodology, and the annual and cumulative data and rankings for all participating utilities.

A special webpage has been set-up for the project, which includes interactive maps and tables..:

Introduction

The Solar Electric Power Association‘s (SEPA) fourth annual Utility Solar Rankings report analyzes utility solar electricity markets in the United States, focusing particularly on the top utilities that are driving solar electric power growth. The SEPA Top 10 ranked utilities integrated 561 megawatts2 (MW) of solar electricity capacity in 2010, representing 100 percent growth over one year.

In addition to continued growth, the new report shows two dramatic changes taking place in utilities‘ use of solar power. 1) The report demonstrates that more and more growth came from areas outside the traditionally strong solar regions of California and the Southwest. Many utilities in other parts of the country now have sizeable solar portfolios, and tens of thousands of photovoltaic (PV) systems were installed in nationwide. 2) With a growing trend toward more utility-owned solar projects and third-party power purchase agreements (PPA), the industry is no longer based solely on customer-owned, net-metered systems.

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Among the Report‘s key conclusions:

Utility solar electric markets continue to expand rapidly across the country.

About 63 percent of the new solar capacity came from utilities outside California in 2010, the largest percentage on record. Seven of this year‘s Top 10 Solar MW utilities were from outside of California, and four of the top-ranking utilities were located in the Eastern United States. Solar power is becoming recognized as an important element in the energy supply planning and customer energy management of utilities nationwide.

Two new growth trends are changing the profile of solar electric power in the United States: centralized projects and utility ownership.

Traditionally, solar markets have relied on distributed PV for most new capacity. However, centralized projects are gaining new traction—eight centralized projects greater than 10 MW each were installed in 2010. This included what are now the two largest PV projects in the United States—the 48 MW Copper Mountain project, in Nevada, with power purchased by Pacific Gas & Electric and the 30 MW Cimarron project, in New Mexico, purchased by Tri-State Generation & Transmission Cooperative Association. The largest concentrating solar power (CSP) project in nearly 20 years was also installed in 2010. It is a hybrid CSP-natural gas facility owned by Florida Power & Light. Centralized projects totaled 226 MW in 2010, up from two projects totaling 46 MW the year before.

Thirty utilities reported owning 140 MW of solar, as opposed to purchasing the power from facilities owned by others. This utility ownership represents a more than 300 percent increase over the previous year.3 Based on future announcements and plans in both categories, both trends are expected to continue their growth and market penetration.

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Individual utility solar portfolios reveal very different market dynamics and procurement strategies.

Utility solar portfolios differ by project technology (PV or CSP), type (distributed or centralized) and ownership (customer, third-party or utility). Some utilities are purchasing power from solar systems, such as rooftop PV, owned by their customers, while others are creating a solar electric market by procuring and/or owning large amounts of solar generation resources. Many are doing both. Like different investment portfolios varying in percentages of stocks, bonds and cash, the Top 10 utilities‘ cumulative solar portfolios reflect varying amounts of utility ownership, CSP technology and distributed PV, discussed in more detail in the full report. Solar portfolios vary from utility to utility because of different state policies, utility preferences, solar resources, electricity prices, incentives available and other factors.

This year‘s Top 10 report not only depicts a rapid rise in the amount of solar installed on utility grids, but a trend towards utility-led initiatives that is behind much of the expansion of the solar market. The remainder of the report includes discussion on the national rankings, including an analysis of the Top 10 cumulative utilities‘ solar portfolios, as well as rankings by region (west, central, and east) and utility-type (cooperative, investor-owned and municipal). Each rankings section includes detailed discussions about emerging trends in geographic diversity, project characteristics, technologies, and utility ownership.

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National Rankings

The annual national rankings measure a utility‘s newly installed solar power and include photovoltaic and concentrating solar power technologies that were interconnected between January 1 and December 31, 2010. The data includes everything from distributed customer systems to wholesale contract purchases from independent power producers to utility owned projects. There are two rankings categories—Solar Megawatts (MW), which measure a utility‘s total solar capacity, and Solar Watts-per-Customer (w/c), which standardizes solar capacity by the size of the utility. SEPA awards the Top 10 utilities in these two categories at its annual Utility Solar Conference (USC). The 2011 USC will be held in July in San Diego, CA.

ANNUAL SOLAR MEGAWATTS

Pacific Gas and Electric (CA) (PG&E) installed 157 MW in 2010 (Figure 1), which secured the top position in the annual solar megawatts rankings. PG&E‘s 2010 solar portfolio was about two-thirds distributed, customer PV projects, with more than 10,000 projects totaling more than 104 MW. PG&E also purchased the output of the new 48-MW Copper Mountain PV facility, the largest in the country. In contrast, Florida Power and Light (FL) (FPL), the second ranked utility, installed 87 MW, largely based on two utility-owned projects—a 10-MW PV project at the Kennedy Space Center and a 75-MW hybrid CSP power plant at a combined-cycle natural gas plant. Public Service Electric and Gas (PSE&G), of New Jersey, maintained its third place position in 2010 through a 75-MW portfolio, about 30% of it utility-owned and 70% customer-rooftop projects.

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Tri-State Generation and Transmission Cooperative Association, in Colorado, was the highest ranked cooperative utility at sixth on the list, based on a power purchase agreement with the 30-MW Cimarron PV project. Other newcomer utilities to this year‘s Top 10 include Jersey Central Power and Light, ranked ninth after interconnecting 1,150 distributed systems in 2010, and Duke Energy Carolinas (NC), ranked tenth on the strength of two very different projects. Twelve megawatts of the 15.5-MW Davidson Solar Facility in North Carolina were completed in 2010, along with the deployment of more than 7 MW of utility-owned, customer-sited solar projects.

All but one of this year‘s Top 10 Solar Megawatt rankings were investor-owned utilities (IOUs), which may be a result of the larger average size of IOUs relative to municipal and cooperative utilities. The top ranked municipal utilities were CPS Energy, in San Antonio, at #11 and the Jacksonville Electric Authority (JEA), in Florida, at #13, both ranked after the completion of larger-sized PV plants under PPAs. After Tri-State G&T, the next ranked cooperative utility was Kauai Island Utility Cooperative in Hawaii at #52 with 0.8 MW.

The total annual capacity of the Top 10 utilities has grown exponentially over the past three years, rising from 167 MW in 2008 to 561 MW in 2010 (Figure 2). This year‘s rankings required a minimum of 20 MW for an individual utility to rank in the Top 10. However, the Top 10‘s share of the overall survey capacity declined from 88% in 2008 to 72% in 2010, indicating a broadening of the market for utilities ranked 11 and higher.

Looking at geographic distribution, seven of this year‘s Top 10 utilities were from outside of California and four of the top ranking utilities were located in the Eastern region, both increases from prior years. Non-California states‘ share of the market has increased from 25% in 2008 to 63% in 2010. Overall, the U.S. solar markets are expanding well beyond California‘s borders.

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As predicted in last year‘s report, 2010 was a growth year for centralized projects. In 2010, eight projects greater than 10 MW, totaling 226 MW, were completed, making up 29% of the market, versus three totaling 62 MW in 2009. This centralized trend in growth is expected to continue through 2011 and beyond, as 24 projects, each greater than 10 MW and totaling more than 1 GW, are already completed or currently under construction in 2011.

Beyond FPL‘s 75 MW CSP project, the rest of the projects and megawatts in the Top 10 were all PV technology—87% of the total. These PV projects, which ranged in size from 1-kilowatt residential installations to 48-megawatt power plants, have much shorter planning horizons and project completion times, along with lesser siting, permitting, financing and transmission requirements at these small- and medium-sized scales.

However, larger PV and CSP projects (those greater than 50 MW) require overcoming financing, siting/permitting, and transmission barriers that might emerge at these larger sizes. CSP represents over 6,000 MW of the over 15,000 MW of future solar projects that SEPA is tracking, but there are differences in project development between CSP and PV. PV can be built and sub-sections of the larger project can be energized over time, resulting in lower construction risk and balance-sheet impact. CSP projects need to be completed in full before commissioning, a period which takes several years from start to finish.

Utility ownership was a new impact on this year‘s rankings. Thirty utilities reported owning 140 MW of new solar capacity, or 18% of the total market, up from an estimated 30 MW, which represented 9%, in 2009. The Top 10 ranked utilities owned 23% of their total annual capacity, with three utilities owning more than a third—Arizona Public Service, Duke Energy Carolinas, and FPL. While most utilities‘ future plans for ownership involve distributed projects, 2010 was the exception due to FPL‘s two large centralized projects. The utility ownership trend is expected to continue its growth, with at least 1,100 MW of announced utility-owned projects in the pipeline over the next few years.

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ANNUAL SOLAR WATTS-PER-CUSTOMER

Silicon Valley Power (CA) ranked first nationally with nearly 40 watts-per-customer, followed by PSE&G with 35.2 Watts-per-customer (Figure 3) 4. The two utilities are very different. Silicon Valley is a California municipal utility with just under 52,000 customers, average electricity rates and a better-than-average solar resource, which interconnected just over 1.8 MW of PV from 74 distributed customer systems in 2010. PSE&G, in contrast, is a large New Jersey investor-owned utility with more than 2.1 million customers, in a region with higher-than-average electricity rates and a lower-than-average solar resource, which interconnected 75 MW from 1,057 PV systems, of which 13% is utility owned. This comparison shows how standardizing the rankings by the number of customers, levels the playing field between big and small utilities…

The top five utilities were rounded out by Hawaiian Electric Company (HI), Xcel Energy (CO), and PG&E (CA), all investor-owned utilities in the Western region. Two newcomers to this year‘s survey, JEA (FL) and Atlantic City Electric (NJ), jumped into the rankings. JEA‘s 2010 capacity was attributed to the installation of the Jacksonville Solar facility, a centralized 12-MW facility. In contrast, Atlantic City Electric‘s 2010 capacity was 100% distributed customer projects. Kauai Island Utility Cooperative, in Hawaii, and Kit Carson Electric Cooperative, in New Mexico, were the highest ranked cooperative utilities at #12 and #17 respectively. Overall, the median watts-per-customer for the Top 10 utilities increased by 50%, from 20 to nearly 30 Watts-per-Customer between 2009 and 2010, which indicates that annual solar capacities quickly increased this past year.

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In contrast to prior years, larger utilities are now ranking in this category in greater numbers. In 2009, just three Top 10 utilities had more than 100,000 customers, while this year‘s list includes seven large utilities—six IOUs and one municipal utility. The rankings of these larger utilities are a testament to the growth of solar– it takes more megawatts to reach these rankings with more customers. However, the Watts-per-Customer rankings can be much more variable than the megawatts rankings since a lower amount of solar from a smaller utility could easily be ranked in future surveys.

There was greater geographic diversity in this year‘s list, with utilities from six different states making the list, including three from the East. In 2009 there were four different states, of which none were in the East.

Unlike last year, the watts-per-customer utility portfolios were driven by both distributed and centralized generation projects, but this varied significantly by utility—five utilities had exclusively distributed projects, one had exclusively centralized projects (or nearly so), and four had a mixture. For example, more than 55% of Xcel Energy Colorado‘s 2010 solar portfolio was achieved through centralized projects, including the 16.2 MW Greater Sandhill project, while Black Hills Energy Colorado Electric was entirely distributed and JEA nearly entirely centralized.

Utility ownership played a smaller role in determining the Watts-per-Customer ranking. Two of the ranked utilities, Tucson Electric Power (AZ) and PSE&G, installed utility-owned projects in 2010, in contrast with six in the Top 10 megawatt utilities. This is partially due to the fact that three of the ten are municipal utilities, which for a variety of reasons (primarily tax incentive ineligibility) are less likely to own solar projects.

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CUMULATIVE SOLAR MEGAWATTS

The cumulative national rankings measure a utility‘s solar portfolio over time and include solar projects that were interconnected any year before December 31, 2010. Similar to the annual rankings, there are two rankings categories—Solar Megawatts (MW) and Solar Watts-per-Customer (w/c).

Southern California Edison (CA) (SCE) and PG&E ranked first and second, respectively, for the third straight year (Table 1), though PG&E is gaining ground. The majority of SCE‘s portfolio (62%) is derived from long-standing PPA contracts with the nine SEGS CSP plants, while PG&E‘s portfolio is largely distributed, customer-sited systems. PSE&G and FPL were ranked third and fourth respectively, with PSE&G edging FPL by 0.1 MW (0.08% more). A similarly close race was seen between NV Energy (NV) at fifth and San Diego Gas and Electric (CA) (SDG&E) at sixth, with only 0.5 MW separating them (0.6% more). Both pairs are amazingly close given the multi-year solar development they have undertaken in very different state markets.

Overall, all Top 10 utilities were investor-owned and eight of the ten utilities were in last year‘s rankings, with the two newcomers being Atlantic City Electric Company and Jersey Central Power and Light. Both utilities integrated distributed solar for the most part.

Geographically, the Eastern region doubled its representation in this year‘s rankings for this category, from two to four. The remaining six Top 10 utilities for this category are all located in the Western region.

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It is interesting to break down each of the ten utilities‘ full solar portfolios by the technology (PV or CSP), size (distributed or centralized) and ownership (customer, third-party, utility). Each utility has taken very different paths to solar development. Among the findings :

Only three of the top ranked utilities have significant portions of their portfolios coming from CSP projects—SCE, NV Energy and FPL.

Six utilities have greater than 80% coming solely from customer or third-party distributed PV systems.

FPL‘s portfolio is nearly entirely based on three utility-owned PV and CSP projects.
Xcel Energy-Colorado‘s portfolio is fairly balanced between distributed and centralized PV projects.

Seven of the Top 10 utilities already have some amount of utility ownership, and continued growth is expected. In fact, among all survey participants, cumulative utility-owned capacity grew from 52 MW in 2009 to 193 MW in 2010—a nearly 270% increase.

It will be interesting to see how these utility portfolios continue to change as the emerging areas of utility-ownership, medium-sized PV projects and centralized PV and CSP project development evolve over the coming years. In the meantime, the solar industry would do well to more specifically understand the approaches that individual utilities make to solar acquisition and tailor their market approach.

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CUMULATIVE SOLAR WATTS-PER-CUSTOMER

The Western region of the country continues to dominate the 2010 cumulative Watts-per-Customer rankings. As in the previous three years, all utilities represented in this category were located within the Western region. The top three utilities remained unchanged from 2009. SCE took the top place for the fourth consecutive year. Kauai Island Utility Cooperative (HI), the Top 10‘s highest ranked cooperative utility, followed in second place. Palo Alto Utilities (CA), a municipal utility, maintained its third place ranking for the straight third year. The diversity of utility types in these top three spots is indicative of the more open competition that this category represents.

The Top 10 utilities were made up of seven IOUs, two municipal utilities and one cooperative utility. California was well-represented with five utilities, followed by Hawaii with four and Nevada with one.

Centralized projects accounted for approximately 38% of the Top 10‘s cumulative capacity. Utility-owned generation accounted for less than 2% of the Top 10‘s cumulative solar portfolios.

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Largest Solar Projects – 2010

2010 was a record year for utility-scale solar projects. Florida Power and Light installed the largest solar project with their 75 MW utility-owned hybrid CSP Martin plant (Table 2). Pacific Gas and Electric and Tri-State G&T followed with PPAs for the 48 MW Copper Mountain and 30 MW Cimarron solar projects, respectively. These are currently the nation‘s two largest PV projects.

Two utilities on the list installed utility-owned projects—Exelon and Florida Power and Light, who combined, installed three utility-owned projects in 2010.

Largest Solar Projects – Cumulative

Cumulatively, the Martin CSP plant is only slightly smaller than the two 80 MW SEGS CSP plants installed in 1990 and 1991 (Table 3). The Copper Mountain PV project is the fourth largest overall. It is only within the last two years that large scale PV plants have grown significantly to these large sizes.