Bridges to New Solar Business Models
Opportunities to Increase and Capture the Value of Distributed Photovoltaics
Creating a sustainable long-term distributed photovoltaic (DPV) market will require aligning the interests of utilities, solar companies, technology providers, and customers. Aligning those interests does not mean discarding the business models that have served the solar market until now. Rather, it means enhancing legacy solar business models by creating an expanded value pool—one that makes DPV affordable and accessible to far more customers, bridges beyond individual customer-centric DPV value to include value delivered to the grid and society, and allows the electricity grid’s myriad stakeholders to share in that value.
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Analytical Framework of Distributed PV Costs and Benefits
As part of preliminary analysis, RMI completed an analytical framework to enable an assessment of the costs and benefits of distributed solar generation on the electric supply system at current and future projected penetrations.
A Review of Solar PV Benefits and Costs Studies (2nd Edition)
From this foundation, RMI conducted a comprehensive study reviewing 16 distributed solar PV benefit/cost studies to assess what is known and unknown about the categorization, methodological best practices, and gaps around the benefits and costs of distributed solar PV, and to begin to establish a clear foundation from which additional work on benefit/cost assessments and pricing structure design can be built.
While a growing body of demonstration projects and analyses is providing empirical data that demonstrate the technical viability of optimally integrating distributed PV to support the grid, there is comparatively little analysis to translate that into costs and values. To better assess the potential value and cost implications, RMI is developing the Electricity Distribution Grid Evaluation (EDGE) model, a MATLAB-based simulation tool.
The primary goal of the EDGE model is to provide clearer insights into the distributed PV value proposition (and eventually complementary technologies such as distributed storage, smart inverters, etc.) to inform more-effective decision making by utilities, customers, regulators and developers, who can incorporate these insights into robust business models. Although the EDGE model includes the ability to study distribution system impacts, it is not intended to replace utilities' existing distribution management systems. Rather, it is intended to provide insight into the likely implications of the integration of distributed energy resources. These may then be studied in further depth using more detailed network models.
Model Technical Review Workshop Summary
In May 2013, the ISBM project team held a technical review session with electricity industry experts in system operations, planning, and economics from Sandia National Lab, National Renewable Energy Lab (NREL), Electric Power Research Institute (EPRI), Lawrence Berkeley National Lab (LBL) and Solar Electric Power Association (SEPA). Attendees were asked to critique current approach and methodologies in order to prioritize next steps for model development to ensure the most value for industry and practical application within the ISBM project.
Electricity System Modeling Software List
Software vendors have created a variety of software tools that utilities, system operators, and researchers use to plan and operate electricity systems. However, there are gaps between operational and planning models, and between distribution-level and bulk power-level models, in terms of both their analytical capabilities as well as linkages between these models. To accurately model the benefits and costs of distributed PV (and other distributed energy resources), these gaps will need to be bridged. Over the course of the ISBM project, RMI has compiled a list of relevant electricity modeling software. This list is not comprehensive, and will continue to be updated as new software is added. Please check back often!
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Within the project, RMI has developed partnerships with two utilities–a vertically investor-owned utility in the Southwest and a generation and transmission cooperative with over 20 member distribution cooperatives in the Midwest–to practically test project hypotheses and new concepts within contrasting utility business models and regulatory environments.
While the circumstances are unique within each territory, both partnerships aim to enable win-win-win solar business models for multiple stakeholders by developing models that could:
- Optimize and capture increased net value either through identified opportunities to reduce solar’s installed or operational costs or increase solar’s production value.
- Provide new pricing options that either increase customer adoption, provide more accurate price signals and/ or minimize cross-subsidization;
- Consider solar PV as a part of a holistic portfolio or package of technologies or strategies;
- Tap new customer markets and increase customer adoption, thereby expanding the economic solar market broadly.