Locational Deployment of Distributed Solar

EXECUTIVE SUMMARY

Utility Strategies for Influencing the

Locational Deployment of Distributed Solar Ryan Edge, Mike Taylor SOLAR ELECTRIC POWER ASSOCIATION

Nadav Enbar, Lindsey Rogers ELECTRIC POWER RESEARCH INSTITUTE

Utility Strategies for Influencing the

Locational Deployment of Distributed Solar Executive Summary

TABLE 1. LOCATIONAL PV DEPLOYMENT OPTIONS

As the amount of solar power pumped onto the grid increases

OPTIONS

DESCRIPTION

Increasing scope and accessibility of solar penetration information

Online, interactive maps of PV penetrations on distribution feeders in a utility’s service territory

Targeted interconnection processes

Fast-tracking interconnection or providing other benefits in areas of low PV penetration

Locational incentives

Link financial incentives for installing solar to local grid conditions

Locational interconnection costs

Raise the standard interconnection costs for areas of the grid where solar penetration is highest

Integration of locational pricing into wholesale solar power purchase rates

Utility purchases a customer’s solar output at rates based on the grid location of the installation

Targeted distribution infrastructure upgrades and cost allocation

Proactively upgrade distribution infrastructure based on forecasts; recover costs by allocating across future projects or other funding means

across the United States, the location of new installations —connecting them to the grid in areas that have adequate capacity—is becoming a growing challenge for some electric utilities, solar companies and their customers. This paper explores a possible response to this issue: the idea that solar deployment might be based not only on customer demographics and solar company business plans—as it is now—but directed, through various market signals from utilities, to or from specific places on the grid. Such locational deployment strategies could help put more solar on local electric distribution lines with lower amounts of installed solar and ease constraints where significant numbers of installations are already interconnected, the industry term for these grid connections. Co-authored by the Solar Electric Power Association (SEPA) and the Electric Power Research Institute (EPRI), this brief was undertaken not as a traditional research project, but as an

Background

exercise in envisioning options for locational deployment and

While PV generation accounts for a small percentage of power

their potential benefits and challenges. The handful of existing

on the U.S. grid today, penetrations in specific areas of the

utility programs based on locational deployment concepts are

country—including parts of Hawaii, California, and New Jersey—

also discussed.

have reached levels that are leading to restrictions on new PV system development.

As a working definition, the term “locational deployment” or “location-specific deployment” encompasses a range of

At least part of the reason is that current PV deployment is

possibilities for influencing the siting of new photovoltaic (PV)

based primarily on consumer decisions and solar industry

capacity in areas of either low solar penetration or high grid

business strategies; PV penetration levels and their impact

resiliency in a utility’s service territory. These areas are better

on the grid are seen as secondary issues. The result, as seen

able to (1) integrate an intermittent power resource at a lower

particularly in Hawaii, can be high levels of solar penetration

cost due to minimal network upgrades or (2) benefit from solar

concentrated in residential and commercial areas that have the

generation.

potential to create higher interconnection costs or, in extreme cases, shut down areas to new PV deployment.

Strategic concepts developed here range from providing more public information on solar penetration levels on distribution

On Oahu, Hawaii’s most populous island, for example, PV

feeders to location-based interconnection processes and

penetrations now exceed 75 percent of peak load on many

financial incentives to innovative methods of allocating costs for

of the Hawaiian Electric Company’s (HECO’s) distribution

distribution infrastructure upgrades (Table 1).

circuits. Roughly 45 percent of the utility’s feeders contain PV continued

Executive Summary continued

The New York State Energy Research and Development

penetrations that range from 75 percent to more than 120

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percent of daytime minimum loads. These high penetration

Authority is currently offering location-linked PV incentives

levels have created operational reliability concerns and led

and several utilities in the state have identified areas on their

HECO to impose a moratorium on new grid connections in

distribution networks that will qualify for these incentives.

many parts of its service territory so it can reconstruct the interconnection process.

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In New England, National Grid is working on a pilot

project that will use locational incentives to spur new solar While Hawaii’s level of systemwide penetration is, at present,

development between 2014 and 2017 in order to defer an

unique, utilities in California, Arizona, New Jersey and

estimated $2.9 million in substation upgrades.

elsewhere are also reporting growing numbers of circuits with high levels of solar penetration and have, in some cases,

Cost distribution: Another, still theoretical approach, would

instituted limits to solar growth.

fast-track grid upgrades to accommodate future solar growth in targeted areas and then allocate the costs to entities, other

The Case for Locational Deployment

than utilities, that stand to benefit from the improvements. This

The locational deployment of PV away from high-penetration

approach could also prevent cost-shifting to nonsolar customers.

areas represents one, proactive avenue through which utilities, in cooperation with solar developers, could support

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greater solar build-out at potentially lower costs and greater

ensure sufficient capacity to support new PV customers who

industry and customer satisfaction. Leveraging knowledge of

would then share the associated upgrade costs at a level that

the local distribution network and other concepts discussed

would still provide a reasonable return on investment.

Upgrades to a specific feeder or cluster of feeders would

in this paper could help utilities and the industry to more strategically direct PV development to grid areas that are

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better suited to accommodate the variable resource.

of an upgrade in exchange for exclusive rights to install projects

One or more third-party solar developers might share the costs

along one or more feeders for a predetermined period of time. Costs associated with the deployment of PV in suboptimal areas could be avoided. At the same time, assorted benefits

Challenges

provided by solar—reduced line losses, delivery system and

Implementation issues: While solar congestion maps can

generation investment deferral and congestion relief, among

effectively leverage readily available information, keeping such

others—could be exploited to support utility operations.

maps current, amid changing market and grid conditions, can present financial and staffing challenges for utilities. In addition,

Benefits

their use by developers or customers is voluntary, limiting their

Market development: Solar “congestion” maps identifying

potential impact.

areas of the distribution system that can accommodate new PV additions, as well as areas that cannot, could allow

Customer equity issues: Strategies aimed at establishing

developers and customers to assess and prioritize project

different levels of incentives or fees for solar customers based

viability at a basic level. Current examples include PV

on geography could be seen as discriminatory or affecting

congestion maps launched by Southern California Edison

customers’ access to the grid. Successful implementation would

and New York’s Consolidated Edison. Such maps can improve

require specific buy-in from stakeholders who understand the

informational transparency, encourage developers to pursue

value proposition involved and the public benefits of a more

more geographically targeted—and profitable—market and

efficient grid at lower overall costs.

sales strategies and ultimately bolster customer satisfaction. Regulatory challenges: Any rate design incorporating a Grid efficiency: Locational incentives can influence PV

locational deployment component—feed-in tariffs or

deployment to strategic areas where solar can benefit the

value-of-solar rates—could face regulatory scrutiny. Investor-

local distribution system—based on load, congestion and

owned utilities, in particular, may face regulatory constraints

other factors—and prevent or defer grid integration issues

on interaction between their internal power marketing and

and costly system upgrades.

transmission and distribution groups.  

The full report, “Utility Strategies for Influencing the Locational Deployment of Distributed Solar,” is available on the SEPA website, www.solarelectricpower.org. Media queries and other requests for information can be directed to K Kaufmann, communications manager, at [email protected].