RMI’s Role to Help Find Solutions
To ensure sustained growth toward a distributed energy future, it is critical to demonstrate and optimize its value proposition to utilities, customers and regulators alike. To do so, RMI is partnering with the DOE SunShot Initiative, whose goal to enable large-scale deployment of solar energy technologies without subsidies, to build empirically tested, scalable business models that build the critical bridge between technical insight and the business case and align the interests of utilities, technology providers, regulators and customers.
To date, solar business models have stopped short of fully unlocking the value of distributed solar PV by primarily targeting cost reductions in the manufacturing, construction, and financing steps in the value chain. While these cost reductions remain critical, focusing only on low-cost deployment onto the grid without taking into account optimal integration into the grid ignores key drivers of value in the electricity system. Targeting value drivers¬–location, timing, reliability, flexibility, predictability and controllability¬¬¬–create new opportunities to optimize the delivered value of solar to support the grid and deliver new energy services to customers and utilities alike.
For example, complementing solar PV with combinations of real-time data and predictive modeling, demand response, advanced inverters, or distributed storage can leverage PV’s value from simply an energy resource to provide additional service applications ranging from asset management to ancillary services. Further value can be created and captured by strategically deploying solar to reduce grid congestion and achieve the greatest savings in electricity generation, transmission or distribution investments.
A growing body of work, including demonstration projects and analyses supported by the Department of Energy (DOE), is providing empirically tested data that demonstrate the technical viability of optimally integrating distributed PV to support the grid and provide energy service to customers. However, the ultimate viability of a growing distributed solar PV market will be won or lost on the demonstrable economic net value to key stakeholders, especially utilities.
Key Project Objectives
- Strategically partner with selected utilities, ISOs, customers and/or technology partners to empirically test and quantify value streams derived through solar PV in innovative demonstration pilots
- Provide mechanisms to quantify and monetize multiple value streams from solar PV to utilities, grid operators, and customers
- Pair solar PV with several additional business offers (e.g., demand response, energy efficiency, smart inverters) in a subset of pilots to demonstrate enhanced value from the combination beyond that offered by solar PV alone
- Understand and evaluate regulatory implications from pilot programs of innovative business models in order to communicate barriers and opportunities to regulators
- Build a shared vision among partners for scaling successful pilots
Major Project Phases and Timeline
The first phase includes conducting an initial assessment of the existing value proposition of distributed solar PV under existing electricity utility system operations and business models. This initial assessment serves as a foundational platform for later model development, identifying and suggesting pathways toward new business models incorporating distributed solar and other distributed energy resources that can maximize value creation for utilities and customers.
During the second phase, RMI will work with a select team of advisors to identify potential pilot projects and respective scopes. Discussions will be informed by RMI analysis and will provide a venue to discuss the merits of different approaches to business models that minimize barriers and maximize value created by distributed solar PV. Criteria for strategic partnership selection will likely include:
- Potential influence of successful model based on market size [as defined by regulatory structure and utility business structure (ownership and operational model)]
- Existing infrastructure or demonstration projects that provide the technical test bed upon which to layer economic evaluation and business cases
Based on results from the pilot testing and early stakeholder feedback, RMI will publish recommendations that synthesize key barriers and the solutions to those barriers that are identified during testing and pilot evaluation, sharing results and recommendations for potential new business models and rate design through engagements with regulators and utilities. The process of engagement, dialogue and active discussion with the regulatory community will serve as a guide for regulators and utilities on how to adapt their regulatory and business models around greater adoptions of energy efficiency and solar energy.