ORIGINAL REPORTING: The Challenge In Properly Valuing Solar
How two value-of-solar studies add up to no clear value of solar; Is rooftop solar really worth 90% less in Montana than in Maryland?
Herman K. Trabish, May 10, 2018 (Utility Dive)
Editor’s note: The debate about solar’s value and how it should be compensated continues at state commissions across the country.
A large disparity in two new solar valuation studies demands explanation. Studies of the value of solar and of distributed energy resources (DER) attempt to quantify their benefits and costs. They have been pivotal, but not decisive, in net energy metering (NEM) debates. A solar valuation study is intended to quantify the cost or benefit each solar owner's array brings to the system. It is calculated in the same volumetric terms as rates, allowing the value to be expressed as a rate of compensation for solar-generated electricity exported to the grid by the solar array owner. Depending on the variables used in the calculation, it may come out above or below the retail rate of system power.
A March 29 study for Northwestern Energy of its Montana territory showed BTM solar’s levelized 25-year value to be between $0.035/kWh and $0.046/kWh. An April 10 draft study done for Maryland’s Public Service Commission (PSC) showed BTM solar’s 2019 value in the state’s investor-owned utility (IOU) territories to be between about $0.31/kWh and about $0.41/kWh. That's about an 88% difference, but the sun is not 88% brighter in Maryland than in Montana. The biggest single difference impacting these numbers is that the most recent average retail price of electricity for Montana is $0.088/kWh and $0.122/kWh for Maryland. A comparison of these studies shines some light on solar valuation methodologies and best practices. One thing is as clear as the light of day: If these studies stand, the future of Maryland’s solar industry is probably much brighter than the future of Montana’s solar industry… click here for more