Value of Distributed Generation

Good to see lots of real data coming on the value of renewables to grids.  In the case, the study focused on solar's contribution.  Acadia is a very well respected think tank.  This is (use the link for more info as this is a long report) a comprehensive analysis of PV's unique value to our power supply.

We think the benefits noted here will grow.  This source of energy will continue to come down in price and up in production.  We love the economics behind change.  Beyond the data highlighted here, you can also calculate the importance of making your power supplies local and the improved health of reducing a region's dependence on fossil fuel.

http://acadiacenter.org/document/value-of-distributed-generation-solar-pv-in-ri/




 Overview Distributed energy resources (DERs) like solar photovoltaic (solar PV) systems provide unique value to the electric grid by reducing energy demand, providing power during peak periods, and avoiding generation and related emissions from conventional power plants. 

The overall value of solar is the sum total of these different benefits, which vary based on the time and location of output from solar panels. Acadia Center assessed the grid and societal value of six marginal solar PV systems to better understand the overall value that solar PV provides to the grid. By evaluating an array of configurations, this analysis determines that the value of solar to the grid – and ratepayers connected to the grid – ranges from 19-25 cents/kWh, with additional societal values of approximately 7 cents/kWh. Figure 1 shows the grid value of a south-facing system (azimuth of 180 degrees) with a 35 degree tilt from horizontal and the corresponding, additional societal value. 

Grid Value of Solar PV To understand how the value of solar generation is different during different times, it is worth noting that the price of electricity varies throughout the day. For example, at 6 a.m. on July 19, 2013, the average wholesale market price of electricity in Rhode Island was $49.28 per MWh; by 4 p.m. the price had jumped to $216.86 per MWh

. A solar PV system 0 5 10 15 20 25 30 Grid Value Societal Value Net Social Cost NOx Net Social Cost SO2 Net Social Cost CO2 Avoided NOx Compliance Costs Avoided CO2 Compliance Costs DRIPE - Capacity DRIPE - Energy Avoided Distribution Costs Avoided Transmission Costs Avoided Capacity Costs Avoided Energy Costs cents per kWh (2014$) 2 acadiacenter.org ● admin@acadiacenter.org ● 617.742.0054 ext. 001 Boston, MA ● Hartford, CT ● New York, NY ● Providence, RI ● Rockport, ME ● Ottawa, ON, Canada feeding electricity into the grid at 4 p.m. on July 19, 2013 would have offset the need to purchase energy from another generator at the high market rate. In addition to avoided energy costs, behind-the-meter solar PV helps offset other costs associated with the electric grid and, ultimately, all ratepayers’ electricity bills.

 These include: avoided capacity costs; avoided transmission and distribution costs; energy and capacity market price suppression effects (also called demand reduction induced price effects or “DRIPE”); and, avoided environmental compliance costs. While not included in this phase of analysis, there is additional locational value associated with solar PV and other DERs if they are strategically located on the grid to help avoid the need for expensive infrastructure upgrades. This can increase the avoided distribution cost component and help direct more DER to be installed where it generates the most value. Below are the results of Acadia Center’s assessment of the value of an additional solar PV system installed near Cranston, RI (population-weighted center of RI).

 The methodology behind each component is available at: http://acadiacenter.org/?p=1764, and the precise values are provided on page 3 and in Appendix A. The average residential retail electric rate in Rhode Island is included as a point of comparison as residential rates are typically the level at which net metered customers are compensated. It would be more accurate to show the average residential retail rate in 2015, but because that data will not be available until the year has ended, 2014 rates are included here. The values for Rhode Island are slightly lower than the results from Acadia Center’s Massachusetts and Connecticut value of solar studies, which is primarily due to lower DRIPE energy and capacity values, lower avoided distribution costs, and, to a lesser extent, lower avoided environmental costs.