A study conducted for the Maine Public Utilities Commission says that the real value of electricity generated by photovoltaic (PV) panels is more than twice what solar customers currently get under net-metering rules.
The study, Maine Distributed Solar Valuation Study, was the result of legislation passed last year directing the PUC to calculate the value of “distributed solar generation” in the state. The report was turned over to a legislative committee on March 1, 2015.
The authors conclude the long-term value of solar electricity is about 33 cents per kilowatt hour. Under current net-metering arrangements, solar customers now get about 13 cents per kWh when they sell excess power to the grid, the Natural Resources Council of Maine (NRCM) said in a news release.
The study weighed a number of “avoided market costs” that solar electricity would save, plus several social benefits, including the social cost of carbon and air pollutants. In all, the study said the long-term value of solar electricity amounted to 13.8 cents per kWh in avoided market costs and another 19.9 cents per kWh in societal benefits, for a total of 33.7 cents per kWh.
The report has been praised, but also called incomplete
The study’s conclusions were welcomed by the NRCM, solar installer Revision Energy, and the American Lung Association of the Northeast.
“Many other states have reached the same conclusion about the high value of solar and in response, they have implemented strong solar policy initiatives to encourage public and private solar investments,” Revision Energy co-owner Phil Coupe said in a statement released through the NRCM. “We hope this study lays the foundation for Maine to adopt policies similar to those in New Hampshire, Massachusetts, and elsewhere, that rapidly increase access to solar by addressing barriers and doing more to spur the solar market.”
NRCM clean energy director Dylan Voorhees said in the group’s written statement that the study confirmed the “enormous value” of solar energy to the state. But the environmental lobbying group also said that the study undervalued solar energy by not accounting for any reduced costs of the distribution grid, which can be smaller in scale and complexity than the larger utility grid that serves the region.
“Utility data has shown that this benefit is tangible, but the value has been disputed,” the NRCM statement said. “When a value is ultimately included for this, it would increase the benefit of solar further.”
The group also said the study didn’t account for the jobs that solar energy creates because that was beyond the PUC’s ability to analyze. “However,” it said, “other studies have found that every megawatt of solar power installed creates one or two direct jobs.”
One of many similar studies around the country
The study in Maine is one of many that have been undertaken in recent years as the number of residential PV systems rises and utilities begin to worry about the long-term implications of net-metering policies.
Many utilities have complained that residential solar customers are getting what amounts to a subsidy from non-solar customers because net metering reduces the amount of money they contribute to grid maintenance. Some have successfully sought user fees and other charges to help offset those costs.
Solar advocates, on the other hand, argue that solar energy produced by small-scale projects is often under-valued, and that it helps utilities avoid a variety of distribution and generation costs, especially when power is produced at times of peak loads, and ultimately benefits all customers. This report is likely to add weight to that point of view.
In a report published two years ago, the Rocky Mountain Institute examined 16 cost/benefit studies by utilities, national labs, and others that had been conducted between 2005 and 2013, but didn’t find much common ground between them. In fact, RMI said, there is a “significant range of estimated value across studies, driven primarily by differences in local context, input assumptions and methodological approaches.”
“Today, the increasingly rapid adoption of distributed solar photovoltaics (DPV) in particular is driving a heated debate about whether DPV creates benefits or imposes costs to stakeholders within the electricity system,” the RMI report said. “But the wide variation in analysis approaches and quantitative tools used by different parties in different jurisdictions is inconsistent, confusing and frequently lacks transparency.”
Practical effects in Maine are not clear
It wasn’t clear what practical effects the Maine findings would have in the near term.
Solar customers of Central Maine Power, the state’s largest electric utility, are already getting the retail rate for excess electricity, so an adjustment of the net-metering rate doesn’t seem likely. But the report could provide a tailwind for legislation aimed at expanding solar energy in the state, and ultimately lead to more compensation to owners of renewable energy systems, Voorhees said by telephone.
Voorhees said he found the report’s conclusion on the long-term value of solar energy “a little bit surprising” and on the high side of value studies elsewhere. But, he added, “it provides pretty strong evidence that a lot of value is being left on the table.”
Central Maine Power didn’t respond to a request for comment.