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It's Time for Utilities to Plan for Disruptive Solar PV Impacts
by Staff Writers
Orlando FL (SPX) Jul 30, 2015

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The Smart Grid Research Consortium (SGRC) has published a new white paper detailing the dramatic growth in residential solar PV systems and discussing utility operational and business model challenges associated with these technologies. The paper describes factors that explain past and future growth in PV installations including forecasts from the Consortium's Utility Solar PV Forecasting Model that shows a 60 percent nationwide increase in residential solar PV over the next year-and-a-half.

The paper illustrates how the clustering of residential solar PV installations on individual circuits and rapid market growth can create power quality issues for utilities whose system-wide PV saturation is still quite small. These power quality and control issues have already occurred at utilities in California, Hawaii, Arizona and other states, and, with the rapidly increasing saturation of PV installations over the next several years, will soon become a common problem for many utilities.

Statistics on US installations are presented by year from 2008 through 2016 along with 15-year historical trends in average residential PV installation costs. Detail on PV electric bill savings for 40 US cities and current "best-practice" installation costs by state reveal geographic detail. Finally, system economic analysis is provided including paybacks for cost/savings combinations and total value of PV systems over 10 years including the capitalized value that owners realize when they sell their homes.

Taken together, this information suggests a more rapidly developing residential solar PV market than generally anticipated and underscores the need to begin addressing the impacts of residential solar PV installation growth on both utility operations and utility business model issues including revisions of rate structures to more accurately reflect costs and benefit associated with increasing distributed solar PV installations.

"One of the most interesting insights presented in the paper is recent evidence from several large-scale studies that show PV investments returning their full cost, or close to the full cost, at the time a house is sold. From this perspective, the economics of nearly all solar installations is attractive.

For example, a 5kW installation in the Pacific Northwest with annual electric bill savings of $500 and an installation cost of $4.5/Watt, has a payback of 45 years (assuming no tax credits, incentives, etc.). However, if the homeowner receives the cost of the investment ($22,500) as a premium when the house is sold, the investment reflects a $42 monthly revenue stream with the investment cost returned when the house is sold."

"A unique and important contribution of this paper is that it presents market information that is both intuitive and detailed enough that readers can draw their own conclusions regarding the growth and timing of solar PV-related issues in their own utility service areas" said Dr. Jerry Jackson, the Smart Grid Research Consortium leader and research director and white paper author.

PV market trends shown in the paper indicate that most utilities should begin an assessment of the impacts of likely future distributed solar on distribution systems power quality and other operating issues along with an evaluation of PV impacts on revenue, cross subsidization, rate restructuring and other utility business model issues.

The Consortium's Solar PV Forecasting Models and Forecasting Services are designed to provide this utility planning support with analysis that applies utility rates, electric PV kWh and bill savings, dwelling unit, household, and neighborhood characteristics, utility policies and other factors providing forecasts over ten years. Installation and load impact forecasts are provided for distribution feeders, substations, ZIP areas, and the entire utility service areas.

The white paper, "It's Time for Utilities to Plan for Disruptive Solar PV Impacts" is available Low, medium and high forecasts are provided to reflect the range of likely PV installation and load impacts.

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