The Rocky Mountain Institute introduced a new report on July 22 that discusses the values that distributed photovoltaics (DPV) provide to utilities and consumers. The report “A Review of Solar PV Benefit and Cost Studies” analyzed 15 other reports from 2005 to 2013 that looked at the costs and benefits associated with DPV, and ultimately concluded that more investigation needs to be done to understand the real value of DPV.
“No study comprehensively evaluated the benefits and costs of DPV, although many acknowledge additional sources of benefit or cost and many agree on the broad categories of benefit and cost,” according to the report’s executive summary. “There is broad recognition that some benefits and costs may be difficult or impossible to quantify, and some accrue to different stakeholders.” Such benefits can include things like consumer health by avoided air pollution from coal-fired power plants and reducing the amount of electricity lost during transmission by installing solar close to where it’s being used.
“As the penetration of distributed solar continues to grow, it is vital to see it as an integral, fundamental part of the electricity system and not just as a ‘bolt-on’ solution,” said Lena Hansen, principal at RMI and co-author of the study. “Appropriately valuing solar PV and the other distributed energy services provided by every actor in the energy equation is part of this process of realignment.”
Study authors Hansen and Virginia Lacy, RMI senior consultant, wrote that one of the key reasons there’s no such comprehensive study is a lack of a clear understanding of the actual costs of integrating DPV onto the grid and that values it can deliver. “Without that foundation of understanding, it’s impossible to fairly evaluate policies such as net metering or its alternatives, and debates become based on opinion rather than fact,” they said.
Perhaps that’s why Arizona Public Service’s (APS’) distributed generation study in 2009 attributed more value to DPV than the more recent study the company did in 2013. In the first study DPV was valued at about 11.75 cents per kilowatt hour. In the more recent study it was valued at 3.56 cents per kilowatt hour. That’s despite significant price drops in solar since the initial study. The change in value was partly because the U.S. is now less likely to see CO2 regulation and energy costs are lower because of lower natural gas prices, as is Arizona’s electric load. All of these factors decrease the value of DPV.
The report is a step toward creating that foundation, by looking at the collective results of the studies. The study authors observed that methodological differences abound throughout the various studies. “But there is some agreement on overall approach to estimating energy and capacity value. There is significantly less agreement on overall approach to estimating grid support services and currently unmonetized values, including financial and security risk, environmental risk and value, and social value,” they wrote.
RMI determined that methods for evaluating the value are growing, but stressed that other gaps need to be overcome to get a good analysis. One the most important things they called for was more transparency. They also called for evaluation of DPV’s distribution value, its grid support services value, and the financial, security, environmental, and social values. The latter are hard to monetize and quantify.