NewEnergyNews: ORIGINAL REPORTING, APRIL 8: ARIZONA'S UTILITY-OWNED SOLAR PROGRAMS: THE NEW BUSINESS MODELS UTILITIES ARE LOOKING FOR?

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Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

The challenge now: To make every day Earth Day.

YESTERDAY

  • ORIGINAL REPORTING: Turning Distributed Energy From Threat To Opportunity
  • ORIGINAL REPORTING: Solar Policy Action Heats Up
  • ORIGINAL REPORTING: Maine’s Almost Solar Policy Breakthrough
  • THE DAY BEFORE

  • TODAY’S STUDY: How To Balance Competing Solar Interests
  • QUICK NEWS, December 6: Sliver Of Hope? Al Gore In Climate Change Meet With Donald Trump; The Opportunity In New Energy; Google Seizing New Energy Opportunity
  • THE DAY BEFORE THE DAY BEFORE

  • TODAY’S STUDY: A Way For New Energy To Meet Peak Demand
  • QUICK NEWS, December 5: Trial Of The Century Coming On Climate; The Wind-Solar Synergy; The Still Rising Sales Of Cars With Plugs
  • THE DAY BEFORE THAT

  • Weekend Video: Trump Truth And Climate Change
  • Weekend Video: The Daily Show Talks Pipeline Politics
  • Weekend Video: Beyond Polar Bears – The Real Science Of Climate Change
  • AND THE DAY BEFORE THAT

  • FRIDAY WORLD HEADLINE-Aussie Farmers Worrying About Climate Change
  • FRIDAY WORLD HEADLINE-The Climate Change Solution At Hand, Part 1
  • FRIDAY WORLD HEADLINE-The Climate Change Solution At Hand, Part 2
  • FRIDAY WORLD HEADLINE-New Energy And Historic Buildings In Europe
  • THE LAST DAY UP HERE

    THINGS-TO-THINK-ABOUT THURSDAY, December 1:

  • TTTA Thursday-First Daughter Ivanka May Fight For Climate
  • TTTA Thursday-Low Profile High Power Ocean Wind Energy
  • TTTA Thursday-A Visionary Solar Power Plant
  • TTTA Thursday-EVs Have A Growth Path
  • --------------------------

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    Anne B. Butterfield of Daily Camera and Huffington Post, f is an occasional contributor to NewEnergyNews

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    Some of Anne's contributions:

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT), November 26, 2013
  • SOLAR FOR ME BUT NOT FOR THEE ~ Xcel's Push to Undermine Rooftop Solar, September 20, 2013
  • NEW BILLS AND NEW BIRDS in Colorado's recent session, May 20, 2013
  • Lies, damned lies and politicians (October 8, 2012)
  • Colorado's Elegant Solution to Fracking (April 23, 2012)
  • Shale Gas: From Geologic Bubble to Economic Bubble (March 15, 2012)
  • Taken for granted no more (February 5, 2012)
  • The Republican clown car circus (January 6, 2012)
  • Twenty-Somethings of Colorado With Skin in the Game (November 22, 2011)
  • Occupy, Xcel, and the Mother of All Cliffs (October 31, 2011)
  • Boulder Can Own Its Power With Distributed Generation (June 7, 2011)
  • The Plunging Cost of Renewables and Boulder's Energy Future (April 19, 2011)
  • Paddling Down the River Denial (January 12, 2011)
  • The Fox (News) That Jumped the Shark (December 16, 2010)
  • Click here for an archive of Butterfield columns

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    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart

    email: herman@NewEnergyNews.net

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      A tip of the NewEnergyNews cap to Phillip Garcia for crucial assistance in the design implementation of this site. Thanks, Phillip.

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    Pay a visit to the HARRY BOYKOFF page at Basketball Reference, sponsored by NewEnergyNews and Oil In Their Blood.

  • ---------------
  • THINGS-TO-THINK-ABOUT THURSDAY, December 8:

  • The Record Of The New EPA Head
  • The Undeveloped New Energy
  • Walking On New Energy
  • Electric Tractor For Emissions-Free.Farming

    Wednesday, April 08, 2015

    ORIGINAL REPORTING, APRIL 8: ARIZONA'S UTILITY-OWNED SOLAR PROGRAMS: THE NEW BUSINESS MODELS UTILITIES ARE LOOKING FOR?

    Arizona's utility-owned solar programs: The new business models utilities are looking for? APS and TEP will try different ways of owning solar and customers will be key

    Herman K. Trabish, January 7, 2015 (Utility Dive)

    Two innovative utility-owned solar programs were finalized by Arizona regulators at the close of 2014, programs that could change the net energy metering controversy. More importantly, they could change the utility business model and the solar business.

    Arizona Public Service (APS) and Tucson Electric Power (TEP) will each implement a pilot rooftop solar ownership plan funded by their customer bases. APS will provide systems averaging 7 kilowatts in size at no upfront cost to some 1,500 of its customers in the Phoenix area. TEP will provide some 600 systems averaging 6 kilowatts each to customers who pay a $250 application fee.

    The APS customers will get a $30 per month bill credit for 20 years. TEP customers will have a 25 year fixed solar payment expected to cover 100% of their on-site electricity use, essentially zeroing out their traditional monthly utility bills.

    “Compensation for the TEP plan is in savings through rates. Compensation through the APS plan is through what is basically a roof rental payment,” Residential Utility Consumer Officer (RUCO) Policy Specialist Lon Huber explained in an interview. “The question is: Which will produce more benefits to non-solar ratepayers and the system in general?”

    Huber was a central participant in the negotiations between RUCO, the Arizona Solar Energy Industries Association (AriSEIA), and APS that produced the foundational policy on which both utilities’ programs were constructed. “My preliminary analysis suggests TEP’s program design can deliver solar under the cost of net metering,” he said. “But it is hard to know exactly how much until the numbers come in.”

    Beating the cost of net metered solar and providing benefits to non-solar owning ratepayers is crucial because it reduces the shifting of electricity bill infrastructure and system charges. That shift of charges has become a major concern for utilities in the last 2 to 3 years as no-upfront-cost, third party ownership (TPO) financing, along with net energy metering, have driven a boom in rooftop solar.

    Because solar owners’ reduced electricity bills have proportionately lower infrastructure and system charges, the burden for such charges are shifted to non-solar owning utility customers. The shift helps make TPO-financed, net metered solar cost competitive. In response, some utilities want to terminate net metering. However, advocates argue solar provides quantifiable benefits to the system greater than the shifted bill charges.

    Foundational policy

    Through the foundational policy and the right regulatory guidelines, “a balanced, level playing field is established between third-party owned business models and the utility,” RUCO’s filing with the Arizona Corporation Commission (ACC) explained. “Third party developers bring unique business models and techniques honed by competition while the utility can offer a suite of different services that confer system benefits and consumer protection while minimizing rate impacts.”

    Utilities should face market forces and third party developers should not be free of infrastructure and system responsibilities, the policy asserts.

    The policy’s key principles include:

    A lowest cost program design for utility owned [distributed generation] DG that does not cost more to ratepayers than the third party ‘revenue loss/cost shift.’ Shared responsibilities around grid safety and vitality as issues arise with higher levels of penetration.

    Appropriate rate design for customers of third party systems that avoids gross over or under compensation.

    The policy also specifies fair interconnection polices for TPO systems, open and shared data, and service by utilities to under-served markets.

    In Arizona’s emerging “non-incentive, noncompliance driven market,” RUCO’s filing explains, these principles can bring ratepayers and Arizona’s economy “more benefits — not less — due to utility involvement in rooftop DG.”

    APS vs. TEP vs. TPO financed, net metered solar

    TEP will invest up to $10 million for a total estimated solar capacity of 3.6 megawatts. The systems will be installed at a per watt cost of between $2.85 and $3.50. The 10 megawatt APS program will have a capital cost of $28.5 million.

    While the APS program provides each solar customer with a guaranteed $30 per month bill credit from the start, TEP’s program initially allows the customer only to break even, Huber said. Savings could eventually be significantly more, he added, but the precise amount is hard to quantify.

    “Things start to happen in the future,” he explained. “If rates go up, the solar owner is shielded from those rate increases because the home theoretically gets 100% of its electricity from solar and the homeowner continues to pay the same rental fee for the system. It is essentially the same thing that SolarCity does with zero-down leases.”

    Farther out, the discount rate on future money could mean that even if the TEP system provides more than $30 of monthly savings in year 15, it could be worth less than APS’s rental payment in today’s dollars.

    Finally, Huber said, the ultimate cost of the TEP and APS programs for the ratepayer will be reduced if fuel prices rise.

    Benefits to the APS and TEP systems will come in multiple and similar forms, Huber said. Both will deploy advanced inverters, have geo-targeting goals, and obtain grid data for research purposes. The key difference between the two, Huber believes, is that a participating TEP customer’s behavior could impact the program’s value and its success.

    “If a TEP customer’s usage drops 10% and the solar system performs 5% better than expected, the excess generation goes to the TEP system,” Huber said. “If the utility gets a really good deal on the installed cost and keeps its O&M low, the system wide savings could significantly reduce TEP’s fixed cost losses associated with the solar.”

    That would “minimize the cost shift in a way that would be comparable to a SolarCity customer having to pay a monthly infrastructure charge,” Huber said.

    The best plan?

    Huber believes the sum of advantages from excess generation, bill charges, and impacts of fuel price increases may put TEP’s plan ahead of either APS’s plan or a TPO financed, net metered business model. “But there are many unknown value streams, especially in the TEP program,” Huber said.

    These two different utility ownership models take wildly different approaches, he added.

    “A big question is whether APS or TEP will have the higher capital cost. This coming year will bring some answers about how much each costs ratepayers and how much of a savings over net metering each will provide.”

    The way the policy was structured, the programs cannot cost more than the total cost of net metered solar, Huber explained. “The question is: Can it be less? And if so, which model will deliver the lower price?”

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