ORIGINAL REPORTING: The Debate About Who Should Build And Own Solar Heats Up
As conflict rises over utility DER ownership, a Duke Florida program could offer a way forward; Regulators must decide how to separate regulated and private markets as both see ownership of rooftop and community solar.
Herman K. Trabish, Oct. 23, 2020 (Utility Dive)
Editor’s note: Efforts like this one to equitably drive the growth of solar will grow in importance as the fight against the climate crisis accelerates.
Utilities are pushing for a bigger role in integrating distributed energy resources (DER) in their service territories, saying their ownership would benefit customers. They also see economic opportunity and other advantages in the flexibility of DER, which is becoming vital in today's power sector transition.
"Utilities are now critical in decarbonization and, as power grid experts, they are leading innovation," said Duke Energy Vice President of Rate Design and Strategic Solutions Lon Huber. "All clean energy options should be on the table, and if a program is structured in a way that provides benefits to all customers — participants and non-participants — it is a win-win that should be pursued."
Meanwhile, a new study from the Department of Energy's Lawrence Berkeley National Laboratory finds benefits of utility DER ownership, though private sector advocates say the data may not tell the whole story.
Utilities competing against private providers exposes shareholders to unnecessary risk, former Federal Energy Regulatory Commission Chair Jon Wellinghoff said, reaffirming his 2015 position, which was cited in the LBNL study. Utilities should instead "host" the "grid marketplace" and "allow third parties to bear the risk of selling DER to end customers," Wellinghoff wrote in a 2015 op-ed.
Though many regulators have accepted utilities' move from traditional, centralized generation to utility-scale renewables, until recently states such as Mississippi and Florida have seen utility DER ownership as intruding in the private market. But a Florida debate led by Rábago Energy Principal Karl Rábago, a former Assistant Secretary of Energy and Texas utilities commissioner over whether utilities should be allowed to own community solar may foreshadow a shift in power sector dynamics.
Utility-owned rooftop solar programs could increase total shareholder earnings by 2% to 5% over 20 years, LBNL modeling found, compared to an estimated 2% loss over 20 years from the same amount of customer-owned or leased rooftop solar. Shareholder benefits come largely from ratepayer-paid returns for utility capital expenditures on solar and from limiting compensation to private, net-metered solar owners, LBNL found.
Under LBNL's scenario, rates increase due to additional utility spending, but only by 2%, comparable to the 2.2% bill increase non-rooftop solar customers would see because of net metering compensation and other costs, LBNL Research Scientist and study co-author Galen Barbose said. "Shareholders win and customers break even in our base case assumptions," Barbose said. Less certain assumptions could further improve the value proposition for utilities, he added… click here for more