A new study released this week by Acadia Center quantifies the grid and societal benefits of solar photovoltaic systems (solar PV) in Rhode Island. Establishing the value of distributed resources like rooftop solar is increasingly important as states explore ways to meet energy needs and deploy clean energy resources.
Acadia Center assessed the grid and societal value of six solar PV systems to better understand the overall value that solar PV provides in Rhode Island. The analysis determined that the value of solar to the grid – and ratepayers connected to the grid – ranges from 19-25 cents/kWh. These values derive from solar PV’s ability to reduce energy demand and provide power during peak periods, thus avoiding generation and related emissions from conventional power plants. The overall grid value of solar is the sum total of these different benefits.
The study also finds that solar PV provides broader societal advantages (such as environmental benefits from avoided greenhouse gas emissions) valued at approximately 7 cents/kWh. This additional value should be considered when assessing costs and benefits and determining additional incentives for solar producers.
One of the key findings is that west-facing solar PV systems in particular are not being adequately compensated under existing programs – like net-metering- which provide a single level of compensation and encourage south-facing installations that maximize kWh output. These programs do not fully account for the value that west-facing systems provide in mitigating costs driven by afternoon peak demand (see Table 1 in the report). Incentives should be designed to maximize the value that solar PV provides to system owners and ratepayer rather than simply encouraging system owners to maximize kWh output. This will help ensure that incentives are fair and optimize grid support.
In fact, the value of west-facing systems is already coming into play in Rhode Island where the Office of Energy Resources has procured 250 kW of peak load reduction – with additional incentives for west-facing solar systems – in the Tiverton and Little Compton area. This is being done in conjunction with National Grid’s “DemandLink” pilot, which is using targeted efficiency and demand response to avoid a new substation feeder in the area; ultimately deferring approximately $2.9 million in new distribution-related costs.
While not included in Acadia Center’s analysis, locational values are important to maximize the savings in distribution costs that solar can bring to ratepayers. Appropriate incentives can ensure that solar PV, energy efficiency, and other customer-side resources are targeted to defer or avoid the need for new infrastructure spending.
This study comes at a particularly interesting time as new solar programs and businesses are being introduced in the state. The Renewable Energy Growth Program, launched this June, gives Rhode Islanders the chance to offset their electricity bills and sell their excess electricity from distributed resources to National Grid through a long-term tariff at a guaranteed fixed price. Programs like these are expected to facilitate a bigger shift toward solar and other distributed generation in the state. As a first step in response to this new trend, the RI Public Utility Commission has opened a docket to assess distribution rate design and cost allocation. Having a better understanding of the value that solar provides to the grid and ratepayers will help inform this proceeding, which could be precedent setting for other jurisdictions.
Leslie Malone is a Senior Analyst at Acadia Center based in the Providence office. Leslie is involved in research and analysis of energy efficiency and clean energy, specifically solar.