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    Wednesday, April 22, 2015


    The new guide to the nation's best solar policies — and how to emulate them; What works in one state won't necessarily work in another

    Herman K. Trabish, January 8, 2015 (Utility Dive)

    The best solar policy is the most specific solar policy, according to a new study of the most effective state solar regulations across the country.

    There's no one formula, but policies that match a state’s specific demographics and physical attributes can drive the residential rooftop solar market growth, a new study from the U.S. Department of Energy’s National Renewable Energy Lab (NREL) finds.

    “Every state has to tailor its policy to its own factors,” explained Elizabeth Doris, co-author of "The Effect of State Policy Suites on the Development of Solar Markets," the third in an NREL series highlighting good solar policy. “In terms of giving state policymakers information they can act on, that is the most important finding.”

    A second key insight is that, though the installed price of solar in the U.S. dropped almost 43% between 2007 and 2012, it is not dropping evenly or having the same impact across all states, Doris said.

    Only California, Hawaii, Nevada, and New Jersey grew more than one watt per person in installed capacity between 2006 and 2007 but, according to the paper, there were 27 states that grew that amount of installed capacity between 2011 and 2012. That means there were 23 states below that level of growth and 12 grew at less than a quarter of a watt per person.

    “If cost were the only major driver for PV capacity increases, all states should benefit,” the paper explains. But they didn’t, suggesting that costs “play a major role in capacity increases in many, but not all, states.”

    Every state, Doris said, “is different and special and changing.”

    The solar policy suite

    Tailoring a “policy suite” begins with key “foundational” policies. The first is allowing legal interconnection of rooftop solar with the grid. The second isvaluing excess generation, which typically is net metering but could be another calculation of solar’s costs and benefits. The third is a state renewables mandate that includes a specific requirement for distributed or rooftop or customer-owned solar.

    “If you have those three things, you will drive a market. It will develop,” Doris said. States with three to four best practice, foundational policies have typically created “robust solar markets,” the paper finds. But some states with quite similar policies get quite different markets. The “age and composition of policy suites are important,” the paper explains, but “policy effectiveness is influenced by background contextual factors.”

    Both Illinois and California have had “best practice foundational policy in place for a number of years and both have well-established favorable TPO (third party ownership) policy,” the paper reports. “But Illinois has been unsuccessful in establishing a robust market, while California’s solar market has thrived” because of “very different demographic and economic contexts.”

    Lifetime revenue potential

    To reflect the varying successes of comparable state policy suites, Doris and co-author Darlene Steward developed a “lifetime revenue potential from net metering” statistic. Because Illinois’s average electricity price and its solar potential are “significantly lower,” California’s lifetime revenue potential of $3.67 per watt is over 70% more than Illinois’s $2.13 per watt. The result is that California’s TPO policy is much more successful because “third-party owners are able to make a better business case in California,” the paper explains.

    “A lot of state policymakers will say ‘don’t tell me what they did in California’ and this shows they are right,” Doris said. “Illinois shouldn’t compare itself to California in policy because its context is so different. But Illinois does look like Pennsylvania and could learn from Pennsylvania’s policy profile.”

    Though Pennsylvania and Illinois have “similar demographic and economic contexts,” the paper explains, “a solar set-aside has helped Pennsylvania’s solar market despite a relatively unfavorable economic backdrop.”

    The unique case of the District of Columbia

    The District of Columbia’s policy experience may be the ideal demonstration of how to build a policy suite that drives a solar market, Doris said.

    D.C. instituted a renewables mandate with a solar set-aside in 2007 that produced some market growth in 2008. With the addition of net metering and interconnection policies in 2009, there was more growth. In 2010, TPO was instituted. “Growth skyrocketed,” Doris said.

    This is “a trend, not a fact” because there isn’t enough data to be conclusive, Doris said. Also, prices for solar dropped sharply in 2009, making it hard to separate out the effects of the two factors. “But the price drops aren’t the only thing going on,” she explained.

    Looking ahead

    As an historical review of policies that have worked, the paper is intended to give policymakers insights into what could work in the future.

    “We are seeing a lot of alternative policy options being floated,” Doris said. “Solar is at an inflection point. Any numbers you look at show tremendous growth and the whole market is trying to identify how to keep moving forward in a way that makes sense for the really wide variety of stakeholders, solar home generators, non-solar-owning utility customers, utilities, regulators, and state policymakers.”

    To get the many ancillary benefits of distributed generation, like economic growth, jobs, and grid stability, “we will have to try a lot of these different mechanisms to see what works,” Doris said. “And policymakers are going to have to start making more nuanced decisions.”


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