PV The Value Connection Energy Analysis Seminar Series Washington, DC

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PV The Value ConnectionEnergy Analysis
Seminar SeriesWashington, DC

• Christy Herig
• christy_herig_at_nrel.gov
• National Center for Photovoltaics
• May 10, 2001

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PV Value Analysis Strategy

• Evaluate grid-connected PV market values for
  varying technology prices.
• Develop quantified value attributes for PV
  technology purchasers, decision makers and
  stakeholders to select a preferred set.

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Objectives for PV Value Connection

• Organize PV value attributes into a matrix or
  toolbox readily available for stakeholders to
  make value set selections (the intent is to
  include only analysis value information
  stakeholders can apply)
• Provide nuances and purposes of the individual
  analysis products assembled
• Prioritize future analysis needs
• Identify capabilities for targeted analysis

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Solar Electric Cost? Price? VALUE

• Energy
• Capacity
• Policies
• Building integration
• Environmental
• Reliability
• Uncertainty/risk modularity
• Barriers

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The Sum of the Values Needs to Exceed the Price
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PV Pricesbut only with volume purchase time
commitments
SMUD PV Pioneer
10
9
8
7
6
5
/kW
Total Installed Cost,
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3
2
First Solar
1
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
YEAR
Sourcehttp//www.smud.org/pv\
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The PV Value Connection Matrix
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PV Energy kWh/kW-yr
2
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PV Demand/Capacity
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Solar Policies

• Sacramento, Los Angeles, Long Island, Chicago,
  Seattle
• Renewable energy production incentive (REPI)
• Federal 10 commercial tax credit
• Accelerated depreciation
• DSIRE Database of State Incentives for
  Renewable Energy

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Building Integrated PV
Building Material Replacement Value
Material avoided by BIPV Installation
/W Value
Material Credit
1/sq-ft 5/sq-ft 10/sq-ft 20/sq-ft
Asphalt Shingle roof, monolithic
glazing Laminated glass w/coatings metal
roofing/cladding Roofing slates, clay tile, high
performance coatings Stainless steel, photochromic
glass
0.10/W 0.50/W 1/W 2/W
SourceA. D. Little
Insulating tiles w/PV result in energy savings of
25 of PV output
Building Load Management Integration

• Load control can increase ELCC by 15

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PV Environmental Value

• Every kWAC installed in FL mitigates
• 14 lbs SOX emissions
• 8 lbs NOX emissions
• 2740 lbs CO2 emissions
• each year of operation

• Using average US values of
• 2.03/lb SOX
• 0.82/lb NOX
• 13/ton CO2
• thats 50/yr or 600/kW (NPV)

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Sacramento, CA Sacramento Municipal Utility
District (SMUD)
Situation - municipal utility and community
decided on early decommissioning of nuclear power
plant and to replace capacity and meet future
demand growth with efficiency and renewables,
resulting in Sustained Orderly Development

• Reduced installed PV costs by 50 (1993-1999)
• Over 7 MW installed
• And

For every 2 MW systems life
Reduced natural resource consumption 124,300
lbs coal, or 8,800 gal oil or 13.5 million cu
ft natural gas
Reduced Emissions 217,000 lbs CO2 1,500 lbs
SO2 830 lbs Nox

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Power OutagesPV Availability as of Ideal
Output
Solar Reliability Value -the cause of the peak
demand is also the resource -disaster
mitigation/preparedness
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Financial Values of Investment Uncertainties/Risk
Demand - - - - - - - - - - - - - - - - Lead
time, Location Plant construction costs - - - - -
- - - - - - - Modularity Plant availability- - -
- - - - - - - - - - - - - - Modularity Plant
value - - - - - - - - - - - - - - - - - - -
Reversibility Fuel prices, Electricity Prices- -
- - - - - - - Fuel costs Environmental
regulations - - - - - Compliance costs
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PV Value Stakeholders

• Energy Service Providers
• IOU
• Municipal Utilities
• Rural Electric Cooperatives
• Consumers
• Residential
• Commercial
• Government
• Federal
• State
• Local
• Industry
• PV
• Building Product, Glass
• Builder/Developer

?
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Energy Service Providers(IOUs, Munis)

• Variable Energy Driven Values
• Defferred Capacity Values

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Six Guidelines

• Capital expenditures planned to upgrade the TD
  system.
• Load growth is low enough, typically no more than
  200 kw per year. Also, Capital expenditures
  divided by load growth above a threshold of
  5,000/kW-yr is another value screen. However,
  consequences from the summer peak energy demand
  in 2001 may reset this benchmark.
• Isolated radial lines, urban underground lines,
  and small substations.
• No lower cost alternatives such as switching, or
  voltage control.
• Summer peaking loads between 800am-400pm, which
  typically requires a mix of commercial and
  industrial customers since residential loads
  profiles fall outside this range.
• Consider location-specific Issues such as land
  availability.

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Download at www.PacificEnergy.com
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Download at www.PacificEnergy.com
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Investor Owner Utility Value Set
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Investor Owner Utility Value Set
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Municipal Utility Value Set
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Municipal Utility Value Set
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Distributed PV Benefits for Lakeland Electric
Municipal Utility Value Set
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Lakeland Assumptions

• Discount rate is 6.5
• Energy value is currently 3.5/kWh and is
  escalating at 3.5 per year
• Generation capacity is worth 600/kW for an ideal
  resource
• TD capacity benefits for an ideal resource are
  400/kW
• PV has an effective load carrying capability for
  generation and TD capacity of 45 (based on
  results for Gainesville Regional Utility)
• The fixed PV system has a 19 capacity factor
• There are 8 loss savings
• Fuel price risk benefit is 25 of the energy
  value (this is based on work done for SMUD)
• Demand uncertainty is high and the TD
  investments have long lead times
• There is equal probability that there will be
  carbon taxes in 10 years of 0, 37 or 110 per
  ton

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Rural Electric Cooperative Stakeholder Value

• REC Line Replacement Study (Hoff, Cheney, 1999)
• Okanogan Cooperative, WA Matzama feeder upgrade
• Efficiency, Cogen, and PV load profile match
• Combined DR alternative 1.4 million relative to
  2.3 million feeder upgrade

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Residential Consumer Value
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Residential Consumer Value

• Break Even Turn Key Cost (BTC)Analysis Approach
• Down payment
• Portion of annual mortgage payment associated
  with the PV system
• Federal personal income tax deduction for PV
  system portion mortgage interest
• Energy bill savings (full value, net metering
  assumed)
• O M
• Environmental mitigation (1999 analysis only)

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Solar Deployment Barriers
Issue
Cost
Years of PV Savings
Permitting
300 (one-time)
0.75
(1.5 of PV system cost)
Property Taxes
240 per year (recurring)
25.5
(1.2 of PV system cost)
Sales Taxes
1,400 (one-time)
3.50
(7 of PV system cost)
Utility Design Review
500 to 1,000 (one-time)
1.25 2.50
Utility metering, interconnect,
200 to 1,000 (one-time)
0.50 2.50
and protection fees
Utility minimum charges and
5 to 15 per month
4.50 13.50
standby charges
(recurring)
Utility insurance requirements
5 to 25 per month
4.50 22.50
(recurring)
Competitive transition charge
Varies, 0.04/kWh in CA
1.5
TOTAL
3,000 one-time, plus
Equal to about 45 years
500 per year
of energy savings
!!
Based on
Wenger (1998)
Starrs
Wenger (1998)
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Commercial Consumer BTC Value
With Building material replacement Emergency
value Environmental Load Control
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Government PV Value

• Facilities
• Special negotiated tariffs
• No tax base for incentives
• Infrastructure Value - Policies
• Economic development
• Jobs
• Gross regional product
• Air quality
• Risk/Uncertainty
• Fuel diversity
• Electricity costs

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Local Government Value(CA)Facilities
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Government Infrastructure Value Economic
Development
Cumulative Investments and Savings 1997-2010
Billions of 1993 dollars
SourceSkip Laitner,Economic Research Associates
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Government Infrastructure Value Economic
Development, Revenue, Environmental
Analysis for AZ Portfolio Standard
SourceH. Wenger, Pacific Energy Group
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Government PV Policy Value to Consumers
Analysis for AZ Portfolio Standard
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Government Policy value effect on consumers
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Government Policy value effect on consumers
Pacific Energy Group
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The PV Value Connection Matrix
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Next Steps

• Post PV Value Toolbox on the web with links to
  analysis products (reports, papers,
  presentations, software)
• Identify missing analysis values for future work
• Electricity price uncertainty
• Develop interactive tool for stakeholders to
  shop for a set of values
• The tool will also apply to policy values and
  metrics