NewEnergyNews: TODAY’S STUDY: Solar Policy To Now

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    Monday, February 05, 2018

    TODAY’S STUDY: Solar Policy To Now

    The 50 States of Solar: Q4 2017 & Annual Review

    Autumn Proudlove, Brian Lips, David Sarkisian, Achyut Shrestha, January 2018 (North Carolina Clean Energy Technology Center)

    Executive Summary

    2017 Solar Policy Action

    State and utility solar policies continued to undergo review in 2017, with nearly every state in the country considering policy or rate design changes – a trend which is likely to continue through 2018 and beyond. Table 1 provides a summary of state actions related to DG compensation, rate design, and solar ownership during 2017. Of the 249 actions catalogued, the most common were related to residential fixed charge and minimum bill increases (84), DG compensation policies (66), and community solar policies (30). The actions occurred across 45 states plus DC in 2017 (Figure 1)…

    While nearly every state in the country took some type of action on distributed solar policy or rate design during 2017, some states were particularly active, taking many different actions or especially impactful actions. The following states stood out in 2017 for their solar policy activity:

    1. Nevada A high level of solar policy action continued to take place in Nevada through 2017. The year began with debate over the Public Utilities Commission’s decision to restore retail net metering for a limited amount of capacity in Sierra Pacific Power territory, and was followed by major legislation restoring retail rate net metering across the state. Furthermore, regulators decided to reduce Nevada Power’s residential fixed charge, following the utility’s request for an increase.

    2. North Carolina Governor Cooper signed H.B. 589 into law in July 2017, making a suite of changes to the state’s solar policies. In addition to major PURPA reforms, the bill initiated a net metering cost-benefit study and opens to the door to net metering rate changes. The bill also created a community solar program and legalized solar leasing in the state for both utilities and third parties. In addition to these changes, the state’s two largest utilities filed general rate cases including fixed charge increases.

    3. New York A major order was issued in New York’s ongoing Reforming the Energy Vision process in March 2017, adopting a value-based compensation structure for distributed energy resources. The new compensation structure is being phased in, while further value stack and rate design changes are being considered. An order was also issued related to utility-owned solar, and Central Hudson Gas & Electric and Penelec have requests pending for fixed charge increases.

    4. Hawaii The Hawaii Public Utilities Commission approved revisions to its net metering successor tariffs during 2017, creating a new “smart export” option to encourage solar-plus-storage. The Commission also adopted final rules for its community solar program late in the year. General rate cases, including proposed fixed charge increases, for the state’s three investor-owned utilities were pending during the year.

    5. Maine After compromise legislation was vetoed in 2016, the Public Utilities Commission (PUC) adopted new DG compensation rules in 2017, which move from net metering to a buy-all, sell-all framework with a phase-down in the credit rate. Legislation was again proposed in the 2017 session to restore net metering and initiate a value of solar investigation, but the bill was also vetoed. Finally, late in the year, the PUC delayed implementation of the new rules until May 2018, and Emera Maine filed a general rate case, including a fixed charge increase.

    6. Arizona Following a late 2016 decision from the Arizona Corporation Commission to move from net metering to a net billing policy with avoided cost crediting, initial credit rates and distributed generation customer rate design were considered in utility-specific proceedings during 2017. A settlement agreement was reached in Arizona Public Service’s case, while proceedings are ongoing for Tucson Electric Power and UNS Electric.

    7. New Hampshire The New Hampshire Public Utilities Commission published a final net metering successor tariff order in 2017 and initiated a value of distributed energy resources study to collect more data before making further changes. Legislation related to low-income community solar was enacted, and two general rate cases, including two proposed fixed charge increases and one residential demand charge, were decided during the year.

    8. Virginia The Virginia state legislature addressed several solar policy issues in 2017, adopting a community solar pilot program, a third-party PPA pilot program, and making changes to net metering for agricultural generators. Stakeholders are reportedly considering further changes to net metering in the state, and multiple residential fixed charge increases were proposed during the year.

    9. Michigan Pursuant to legislation enacted in late 2016, stakeholders worked toward the creation of a net metering successor tariff during 2017 and began a study examining the costs and benefits of net metering. The Commission opted to continue net metering until the alternative tariff is completed, and the staff filed a proposed tariff in December. Several utilities in the state proposed residential fixed charge increases during the year.

    10. Utah Utah regulators issued a major decision on Rocky Mountain Power’s proposed net metering and rate design changes for distributed solar customers. Regulators approved a net billing transition tariff, crediting exported energy at a rate slightly lower than retail, while rejecting a demand charge and added fixed fee. Finally, the Commission opened a new export credit proceeding, in which a more permanent credit rate for exported energy will be decided.

    Top Solar Policy Trends Of 2017

    Convergence Toward Net Billing as the New Net Metering

    Thus far, the majority of states issuing net metering successor tariff decisions have opted to move to a net billing policy, allowing behind-the-meter consumption but crediting all exported energy at a rate other than retail. In 2017, Jacksonville Electric Authority, Indiana, New York, and Utah approved transitions from net metering to net billing. Net billing models are under consideration in several additional states, including Arkansas, Louisiana, and Michigan.

    Diverse Credit Rate Approaches and Methodologies

    While there is growing convergence toward the net billing framework, states are taking diverse approaches to credit rates for excess generation. The most common of these have been avoided cost and value-based crediting, although there are is a wide variety of methodologies in use or under consideration for calculating avoided cost and the value of distributed generation.

    Emphasis on Studies and Data

    A theme present throughout 2017 was state policymakers’ emphasis on studies and data in decision-making. Legislatures in Michigan, Montana, and North Carolina enacted bills opening the door to net metering changes, but only after cost-benefit studies are conducted. In New Hampshire and Utah, regulators made relatively minor changes distributed generation compensation rules, while initiating new studies and data collection efforts to aid in deciding further changes.

    Community Solar Action Climbs

    Action on state community solar policies and programs has steadily increased over the past three years, with 21 states taking a total of 30 actions during 2017. Thirteen states took 18 actions on community solar policies during 2016, while only seven states took 13 actions in 2015. Two states – North Carolina and Virginia – adopted new community solar policies in 2017.

    Fixed Charge Increase Requests Frequently Partially Approved

    Residential fixed charge action has increased steadily over the past three years, with 61 requests to increase charges pending or decided in 2015, 71 in 2016, and 84 in 2017. A total of 44 decisions were made on these requests during 2017, with regulators approving only a portion of utilities’ requested increases in 57% of these cases. Of the partial increases granted, regulators approved, on average, 26% of the utility’s original request. Only six utilities were granted their full requested increases.

    Demand Charge Proposals Down, New Approaches Up

    Only three investor-owned utilities proposed mandatory demand charges for residential distributed generation customers in 2017, down from five in 2016 and ten in 2015. However, demand charges showed up in other places during the year, including legislation. Legislation approved in multiple states specifically authorizes additional fees, including demand charges to be applied to distributed generation customers.

    Net Metering and Rate Design Changes as Part of Broader Reforms

    More states are considering net metering and rate design changes as part of broader solar policy or grid modernization reforms. In New Jersey and North Carolina, net metering is being addressed as part of a broader solar policy investigation or reform. DC, Illinois, Maryland, and New York are addressing distributed solar policy as part of grid modernization proceedings.

    Solar-Plus-Storage Eligibility Emerges as a Key Net Metering Consideration Several states, including Colorado, Massachusetts, New York, and Rhode Island, continued or initiated investigations into the net metering eligibility of solar-plus-storage systems. Meanwhile, the Hawaii Public Utilities Commission approved a new compensation tariff specifically for solarplus-storage customers.

    States Consider Time-Varying Rates for Distributed Solar Customers

    As states and utilities examine net metering successor tariffs and rate design changes for distributed solar customers, time-varying rates are gaining attention. In New Hampshire, regulators initiated a time-varying rates pilot program, while a pilot is also being designed in Maryland. The Vermont Public Service Department recommended exploring time-varying rates for net metering customers.

    Looking Back: 2015 – 2017

    Distributed solar policy action has steadily increased over the past few years, with states and utilities taking approximately 175 actions in 2015, 212 actions in 2016, and 249 actions in 2017. Figure 3 shows the total number of solar policy actions taken in each year, while Figure 4 displays the total number of states taking action in each category. Note that several actions were considered over multiple years.

    In 2017, activity increased in all categories except DG compensation, which showed a slight decline. Although slightly fewer DG compensation actions were taken in 2017, a greater number of states took action related to DG compensation during the year. Over the entire period from 2015 to 2017, a total of 39 states plus DC considered or adopted changes to DG compensation rules.

    Community solar and fixed charge action have shown steady increases in activity from 2015 to 2017. The number of total states taking action on community solar has also increased over this period, while the number of states in which utilities requested residential fixed charge increases remained steady in 2017…

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