TODAY’S STUDY: The Surprising Value Of Solar
Benefits and Costs of Utility Scale and Behind The Meter Solar Resources in Maryland
April 10, 2018 (Daymark Energy Advisors)
On September 26, 2016, the Public Service Commission of Maryland (the “Commission” or “MD PSC”) initiated Public Conference 44 (“PC44”), a targeted review to ensure that Maryland’s electric distribution systems are customer-centered, affordable, reliable and environmentally sustainable. One topic identified for exploration as part of PC44 was the benefits and costs of distributed solar energy resources in Maryland. This report, developed under the direction of the Commission personnel and with the support and contribution of information from Maryland’s four investor owned utilities (“IOU”), documents an independent analysis of the benefits and costs of solar within each IOU’s service territory.
This analysis builds up from the components of potential benefits (or costs) that solar brings when interconnected with the electric system. These components are categorized as direct utility and societal, with some components considered in both categories. This analysis presents the benefits and costs as they accrue to or affect (1) the bulk power system, (2) local power distribution systems, and (3) society and the economy.
With all components taken together, Figure 1 depicts the resulting value of solar within each of the four utility service territories, for both behind the meter (“BTM”) installations (see dashed lines) and utility scale installations (see solid lines)
We developed the value of solar by component for each of the four IOUs. Here we include, as an example, the stacked component value charts for both utility scale BTM and resources in Potomac Edison’s service territory. In this service territory (APS zone) for example, the value of utility scale solar (purple solid line in Figure 1) increases from about $0.19 per kilowatt hour in 2019 to about $0.22 per kilowatt hour in 2028. Those same values are represented in Figure 2 by the top of the stacked bars.
Figures 1 through 3 show that the value of solar is significant when considering broader considerations of value. For both BTM and utility scale resources, economic benefits to the state make up a large portion of the benefit, but the benefits to the bulk power system, which include Avoided Energy, Energy Market Price Effects, Avoided Capacity, Avoided RECs, and Avoided Transmission Costs are also significant. Distribution system benefits are not included on Figures 1 through 3 as they are location specific, but these benefits could add significantly to the value of solar if projects are sited appropriately. For example, a 2 MW project that avoids a $2M distribution investment, could add $0.11/kWh in additional locational benefits.
This study also analyzed the potential for future solar development in Maryland. BTM potential was evaluated by looking at available rooftop sites, utility scale potential was evaluated by looking at available land, and both types of potential were analyzed within the context of the amount of hosting capacity the distribution systems could absorb. The results of this analysis are shown below in Table 1. This analysis indicates that Maryland has significant potential for additional solar development.
The large potential for additional BTM and utility scale solar development shown in Table 1 and the significant value that solar can bring to the bulk power system, distribution system, and to the residents of Maryland through economic and health benefits represent a considerable opportunity for the state. The state and investor owned utilities should be developing policies and enhancing utility system planning processes to encourage additional cost-effective solar development.