Why Value of Solar
Defining Solar Value -- 6/11/2015 – SEBANE -- Boston, Mass Why Value of Solar Richard Perez U. Albany Northeast Solar Energy Market Coalition NE States Solar Industry Associacions 1 Why Value of Solar kWh penetration cost TAX PAYER economic development societal value VALUE environment security Fuel Price Risk Mitigation Distribution Capacity Value Loss Savings Transmission Capacity Value Energy Value COST DISTRIBUTION RATE PAYER Market Price Supression 2 LEGAL REGULATORY kWh NET METERING FIXED CHARGES REMOTE VALUE DISTRIBUTION COST VESTED INTERESTS TAXES, FED, LOCAL DER RECS TWO‐WAY GRID 3 kWh VALUE VALUE COST • LOCATION DISTRIBUTION COST 4 kWh VALUE VALUE COST • LOCATION • PENETRATION DISTRIBUTION COST 5 VALUE kWh smart curtailment One-Minute Global Irradiance (W/sq.m) NANOGRID VALUE DISPATCHABILITY XX COST • LOCATION • PENETRATION • PV SPECS DISTRIBUTION COST 6 Mass PV remuneration system: Net value depends on: • LOCATION • PENETRATION • PV SPECS DISTRIBUTION Sales & property tax exemptions 15% State tax Credit (residential) 30% Federal tax Credit MACRS (business) SRECs & local rebates Net metering Solar is not just another DER 7 finite renewable 1,2 70‐120 WIND per year Waves11,3 0.2‐2 SOLAR 23,000 per year 10 215 total Natural Gas 1,8 3 ‐11 per year OTEC1,4 240 total Petroleum 1,8 2 – 6 per year Biomass 1,5 2009 World energy use 16 TWy per year 3 – 4 per year HYDRO 1,6 TIDES 1 2050: 28 TW 0.3 per year 90‐300 Total 0.3 – 2 per year Geothermal1,7 Uranium 1,9 900 Total reserve © R. Perez et al. 8 COAL 1,8 © Richard Perez, et al. solar WIND Biomass Coal Natural Gas Uranium Petroleum © Richard Perez 10 VERY HIGH PENETRATION 11 Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load Variable generation firm PV capacity threshlold 20 day sample of Summer New York City electrical load © ASRC 12 Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load Variable generation firm PV capacity threshlold VARIABLE LOAD GENERATION BASE LOAD GENERATION © ASRC 13 Solar Penetration: 3% Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load Variable generation firm PV capacity threshlold © ASRC. 14 5% Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load Variable generation firm PV capacity threshlold © ASRC. 15 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 8% Variable generation firm PV capacity threshlold © ASRC. 16 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 10% Variable generation firm PV capacity threshlold © ASRC. 17 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 13% Variable generation firm PV capacity threshlold © ASRC. 18 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 15% Variable generation firm PV capacity threshlold © ASRC. 19 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 18% Variable generation firm PV capacity threshlold © ASRC. 20 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 20% Variable generation firm PV capacity threshlold © ASRC. 21 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 23% Variable generation firm PV capacity threshlold © ASRC. 22 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 25% Variable generation firm PV capacity threshlold © ASRC. 23 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 25% Variable generation firm PV capacity threshlold © ASRC. 24 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 28% Variable generation firm PV capacity threshlold © ASRC. 25 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 30% Variable generation firm PV capacity threshlold © ASRC. 26 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 33% Variable generation firm PV capacity threshlold © ASRC. 27 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 35% Variable generation firm PV capacity threshlold © ASRC. 28 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 38% Variable generation firm PV capacity threshlold © ASRC. 29 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 40% Variable generation firm PV capacity threshlold © ASRC. 30 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 43% Variable generation firm PV capacity threshlold © ASRC. 31 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 45% Variable generation firm PV capacity threshlold Excess PV must be stored or lost © ASRC. 32 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 48% Variable generation firm PV capacity threshlold Excess PV must be stored or lost © ASRC. 33 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 50% Variable generation firm PV capacity threshlold Excess PV must be stored or lost © ASRC. 34 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 53% Variable generation firm PV capacity threshlold Excess PV must be stored or lost © ASRC. 35 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 55% Variable generation firm PV capacity threshlold Excess PV must be stored or lost © ASRC. 36 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 58% Variable generation firm PV capacity threshlold Excess PV must be stored or lost © ASRC. 37 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 60% Variable generation firm PV capacity threshlold Excess PV must be stored or lost © ASRC. 38 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 63% Variable generation firm PV capacity threshlold Excess PV must be stored or lost © ASRC. 39 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 65% Variable generation firm PV capacity threshlold Excess PV must be stored or lost © ASRC. 40 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 68% Variable generation firm PV capacity threshlold Excess PV must be stored or lost © ASRC. 41 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 70% Variable generation firm PV capacity threshlold Excess PV must be stored or lost © ASRC. 42 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 73% Variable generation firm PV capacity threshlold Excess PV must be stored or lost © ASRC. 43 Cost of high penetration = cost of storage Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load 75% Variable generation firm PV capacity threshlold Excess PV must be stored or lost © ASRC. 44 VERY HIGH PENETRATION SOLUTIONS 45 1. LOAD SHAPING 46 © Richard Perez, et al. Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load Variable generation firm PV capacity threshlold 47 © Richard Perez, et al. Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load Variable generation firm PV capacity threshlold 48 © Richard Perez, et al. Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load Variable generation firm PV capacity threshlold 49 © Richard Perez, et al. Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load Variable generation firm PV capacity threshlold 50 © Richard Perez, et al. Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load Variable generation firm PV capacity threshlold 51 © Richard Perez, et al. Solar Generation Excess PV storage requirement Firm capacity storage requirement Base Load Variable generation firm PV capacity threshlold 52 © Richard Perez, et al. Flow batteries 1. LOAD SHAPING 2. STORAGE Compressed air metaefficient.com pangeaexploration.com Pumped hydro & gravity 53 © Richard Perez, et al. 1. LOAD SHAPING 2. STORAGE 3. WIND GENERATION SYNERGY DAILY CYCLE SEASONAL CYCLE 54 © Richard Perez, et al. Source: Marc Perez, Columbia University 1. LOAD SHAPING SINGLE CITY 2. STORAGE Source: Marc Perez, Columbia University US‐WIDE 3. WIND GENERATION SYNERGY 4. INTERCONNECTION Source: Marc Perez, Columbia University NORTH & SOUTH AMERICA © Marc Perez, Columbia U. 55 © Richard Perez, et al. 1. LOAD SHAPING Source: Marc Perez, Columbia University SINGLE CITY 2. STORAGE 50% energy curtailment 3. WIND GENERATION SYNERGY Source: Marc Perez, Columbia University 4. INTERCONNECTION 5. OUTPUT CURTAILMENT 56 © Richard Perez, et al. 1. LOAD SHAPING 2. STORAGE 3. WIND GENERATION SYNERGY 4. INTERCONNECTION 5. OUTPUT CURTAILMENT 57 VOS LOGISTICS 58 FEMARKS: VOS depends on LOCATION, PENETRATION & SPECS • Long term perspective • Who should pay for the Smart FiT 40 Net value is a predictable 35 function of penetration 30 economic development societal value 25 cents per kWh penetration cost environment 20 security 15 Market Price Supression 10 Fuel Price Risk Mitigation 5 Distribution Capacity Value 0 Loss Savings Transmission Capacity Value ‐5 Energy Value ‐10 Upstate NY 1% Capacity PV penetration Upstate NY 30% Capacity penetration 59 © ASRC FEMARKS: VOS depends on LOCATION, PENETRATION & SPECS • Long term perspective • Who should pay for the Smart FiT 60 © ASRC FEMARKS: VOS depends on LOCATION, PENETRATION & SPECS • Long term perspective • Who should pay for the Smart FiT 61 © ASRC FEMARKS: VOS depends on LOCATION, PENETRATION & SPECS • Long term perspective • Who should pay for the Smart FiT Levelized VOS 62 © ASRC FINAL REMARKS: VOS depends on LOCATION, PENETRATION & SPECS • Long term perspective • Not a subsidy • Who should pay for the Smart FiT 40 35 30 20 15 10 Value Transfer Mechanism 5 VOS tariff cents per kWh 25 0 ‐5 BENEFICIARIES VALUE CREATORS ‐10 © Perez et al. 63 FINAL REMARKS: VOS depends on LOCATION, PENETRATION & SPECS • Long term perspective • Not a subsidy • Who should pay for VOS tariff Fed ITCs and other tax‐based Incentives 40 20 15 10 5 RAYEPAYER cents per kWh 25 VOS tariff 30 TAXPAYER 35 0 ‐5 BENEFICIARIES VALUE CREATORS ‐10 NEM, RECs © Perez et al. 64 FINAL REMARKS: VOS depends on Long term perspective Not a subsidy Who should pay for VOS tariff Compatible with all deployment strategies: user‐sited, ppa, community solar, utility‐scale.. 40 35 M 30 M 25 M VOS tariff cents per kWh • • • • LOCATION, PENETRATION & SPECS 20 15 10 5 M 0 ‐5 BENEFICIARIES VALUE CREATORS ‐10 © Perez et al. 65 FINAL REMARKS: VOS depends on Long term perspective Not a subsidy Who should pay for VOS tariff Compatible with all deployment strategies: user‐sited, ppa, community solar, utility‐scale.. Utilities become partners ‐‐ fits their business model 40 35 30 VOS tariff 25 cents per kWh • • • • • LOCATION, PENETRATION & SPECS 20 15 10 5 0 ‐5 BENEFICIARIES VALUE CREATORS ‐10 © Perez et al. 66 NEXT STEPS 67 Avoided Energy Cost 1. VOS STUDY Avoided Generation Capacity and Reserve Capacity Costs Avoided NG Pipeline Costs Solar Integration Costs Net Social Cost of Carbon, SO2, and NOx Avoided Transmission Capacity Cost Market Price Response Economic Development Value Avoided Distribution Capacity Cost Commodity cost reduction Other environmental/societal values Voltage Regulation Other / Long term societal value Avoided Fuel Price Uncertainty Risk mitigation 68 © Richard Perez, et al. 1. VOS STUDY • Temporary Lifting of NEM Cap – Small risk for utilities 2. VOS PILOT • • • Location(s) – Transmission, distribution, industrial residential, eastern, western… Logistics – participating utility(ies), virtual VOS Setting – <= VOS & >= Cost‐based ROI 3. FULL VOS >> HIGH PV PENETRATION 69 © Richard Perez, et al. 70 © Richard Perez, et al. 71
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