Conf Call UBM 10.12
Utility Solar Business Models: What are they, and what makes a good one? How can solar build on previous work? SEPA Conference Call Presentation October 12, 2007
Adapted from: SEPA Pre-Conference Workshop SolarPower 2007 Conference Long Beach, California September 24, 2007
Presented by: John Nimmons, J.D. SEPA Project Lead Mill Valley, CA 415.381.7310 [email protected]
Agenda What is a ‘business model’? What’s different about a utility business model? How can we evaluate utility solar business models? What work’s been done in this area, and how can solar
stakeholders build on it?
STAC Utility DER Incentives Project Ê approach and participants Ê business cases considered Ê cost/benefit analysis and tools Ê results and recommendations
What are the next steps, and how can stakeholders participate? 2
What is a ‘business model’? “Business model is one of those terms of art that were central to the internet boom: It glorified all manner of half-baked plans. All it really meant was how you planned to make money.” *
* Michael Lewis, quoted in Chesbrough, H. and Rosenbloom, R.S, The Role of the Business Model in Capturing Value from Innovation, Industrial and Corporate Change, V.11, No.3.
3
*
But there’s more . . . Delivering value may require a paradigm shift
some innovations succeed using familiar models, but ...
those models don’t always fit the technical or market opportunity, so ...
firms often need new perspectives to create, capture and deliver value from new opportunities, and ...
they often have great difficulty departing from familiar ways
“Identifying and executing a new or different business model is an entrepreneurial act requiring insight into both the technology and the market.”
* from Chesbrough, H. and Rosenbloom, R.S., The Role of the Business Model in Capturing Value from Innovation
4
A business model is ... ‘a focusing tool to mediate between technology and value’ *
Business BusinessModel Model Technical Inputs 9 solar technologies 9 applications 9 feasibility 9performance
market market value valueproposition proposition value chain value chain cost cost&&profit profit value network value network competitive competitivestrategy strategy
Economic Outputs 9 value to utility customers 9 value to shareholders 9 value to society 9revenues 9 pricing 9 profit
* from Chesbrough, H. and Rosenbloom, R.S., The Role of the Business Model in Capturing Value from Innovation
5
Utilities are different To succeed for a utility, a business model must serve multiple stakeholders’ interests the
utility’s owners
Ê IOU shareholders Ê POU citizens/voters Ê Coop members
its
customers
Ê participants Ê non-participants Ê protected groups (low-income, elderly, handicapped)
society,
or the public interest
Ê IOU regulators require it Ê POU officials represent it Ê Coop executives focus it (on members)
6
Business models & regulation
Level of Regulation
Regulation shapes business models – some more than others Pervasive economic regulation
Investor-owned Investor-owned utility utility
Political imperatives
Membership control
Publicly-owned Publicly-owned utility utility
Cooperative Cooperative utility utility
General law Mom & Pop
Small private business
Large private business
Type of Business
7
So . . . what’s a utility business model? How the utility will –
create value in the marketplace
profit by capturing a share of that value
sustain the business over time
Elements include –
utility roles
others’ roles
economic & financial impacts
regulatory treatment
• buy output • acquire projects • develop projects • own assets • provide services • incentivize others . . . • provide a site • sell &/or install equipment • develop projects • provide maintenance • buy or aggregate output . . . • value streams & magnitudes • cost/benefit allocations • project & aggregate impacts . . .
• ratebase treatment • revenue impacts • incentives . . .
8
Evaluating utility solar business models ‘Cost-effectiveness’ is the key
costs vs. benefits Ê tangible & intangible both matter Ê ideally quantifiable, but judgment plays a role
one stakeholder’s benefit is often another’s cost Ê must recognize different stakeholder perspectives
utility regulators and managers apply various tests Ê Ê Ê Ê
Participant Cost Test: Is solar worth it to the participating customer? Ratepayer Impact Measure: How will it impact utility earnings or rates? Total Resouce Cost test: What’s the net tangible benefit or cost? Societal Cost Test: Are there other societal costs or benefits, or ‘externalities’?
New assessment tools streamline the task Ê see STAC Project discussion, below
9
What’s a good utility business model? ‘Win/win/win’ is the goal net benefits ≥ net costs for each stakeholder multiple stakeholders benefit, & none are harmed
Win/win/win example:
utility pays a ‘locational credit’ to solar provider (a cost to the utility and a benefit to the provider)
credit is set at a level that makes program participant and other ratepayers better off (both PCT and RIM benefit/cost ratios > 0)
that’s good, but is it a sustainable business model? 10
Can solar build on other work? YES: the 2006-07 STAC Incentives Project ‘Creating & Demonstrating Utility Distributed Resource Incentives’
Primary sponsors
State Technologies Advancement Collaborative (USDOE/NASEO) California Energy Commission Massachusetts Technology Collaborative
One of several EPRI-led collaboratives, 2003-on
catalogued existing utility incentive programs & business approaches identified important legal & regulatory issues, & program alternatives developed sophisticated spreadsheet tools to assess benefits vs. costs for each key stakeholder group systematically explored ‘win/win/wins’ benefitting all groups defined & tested utility business models for PV & other resources 11
STAC Incentives Project:
Participants Government & Research California Energy Commission
U.S. Dept. of Energy U.S. Environmental Protection Agency Nat’l Assn. of State Energy Offices Mass. Div. of Energy Resources Mass. Technology Collaborative Mass. Dept. of Telecomm & Energy NY State Energy Research & Dev. Auth. New Jersey Board of Public Utilities Electric Power Research Institute
Customer Reps Los Angeles County Sanitation Dist.
General Services Administration Democracy and Regulation Energy Consortium
Utilities
Southern California Edison Pacific Gas & Electric San Diego Gas & Electric Edison Electric Institute National Grid Northeast Utilities NStar Tennessee Valley Authority
Public Interest Conservation Law Foundation
Conservation Services Group
Vendors/Developers Solar Turbines
Cummins Power Generation Northern Power Systems RealEnergy TurboSteam UTC Power EnerNOC
EPRI Project Team Ellen Petrill, Director
David Thimsen, Project Mgr. John Nimmons & Assoc. Madison Energy Consultants Energy & Environmental Econs. Regulatory Assistance Project 12
STAC Incentives Project:
Issues Addressed Are there viable business models for investor-owned utility participation in DER markets? – i.e., approaches that benefit:
participating customers non-participating customers the utility and its shareholders society at large
Can we quantify their stakeholder impacts – who benefits, who pays, and what drives this? What regulatory changes might be needed to support promising business models? Can we test these business & regulatory approaches in pilot projects? 13
STAC Incentives Project:
Collaborative Activities 2d stakeholder workshop Recommended state-specific pilot approaches
. . . MA & CA stakeholder discussions to identify viable pilot projects . . .
MA: Customer-owned 2-day stakeholder workshop Recommended two inquiries, with two work groups:
Project Team developed ‘strawman’ business models
. Aug
Work Group activities . . . 1. Customer-owned DER . . . 2. Utility-owned DER . . .
1. Customer-owned 2. Utility-owned
t. Se p
. Oct
. Nov
. Dec
CA: Utility-owned
. Jan
. Feb
Mar
. Apr
.
200
May
7
6 200
14
STAC Incentives Project:
Defining a ‘business model’ How the utility will –
create value in the marketplace
profit by capturing a share of that value
sustain the business over time
Elements include –
utility roles
others’ roles
economic & financial impacts
regulatory treatment
• buy output • acquire projects • develop projects • own assets • provide services • incentivize others . . . • provide a site • sell &/or install equipment • develop projects • provide maintenance • buy or aggregate output . . . • value streams & magnitudes • cost/benefit allocations • project & aggregate impacts . . .
• ratebase treatment • revenue impacts • incentives . . .
15
STAC Incentives Project:
Analyzing Costs & Benefits Working Groups worked closely with E3 (Energy & Environmental Economics, San Francisco, CA)
Previous work identified costs & benefits, including: • • • • • • •
capital cost fuel cost maintenance cost standby charge thermal payment facilities payment efficiency/non-DG eqpmt
• • • • • • •
electric bill savings gas bill savings generation capacity T&D capacity DG electricity purchase wholesale energy grid reliability
• • • • • • •
backup value avoided waste stream reduced emissions fuel cost subsidy REC credit value State incentives Federal incentives
Key analytical point:
a benefit to one stakeholder is often a cost to another 16
STAC Incentives Project:
Quantifying Costs & Benefits E3 developed 2 modeling tools for this project 1. ‘Single installation’ calculator model shows – Ê who benefits and who pays for various types of DER Ê whether benefits exceed costs for each stakeholder group Ê which benefits and costs drive the outcome
2. ‘Aggregate impact’ calculator model shows the impacts of variable DER penetration levels on – Ê utility revenues or customer bills Ê utility rates
Ê utility net income Ê utility return on equity Ê net societal savings
Both allow flexible manipulation of variables, and offer sophisticated screening tools 17
STAC Incentives Project:
Business Cases Considered All DER installed on customer premises, but some on the utility side of the meter
Customer-owned
(& utility-facilitated)
Combined cooling, heating & power (CCHP) Commercial rooftop PV
Utility-owned
(& provider-allied)
CCHP, on either side of the meter Biogas, from dairy or other customer operations Residential rooftop PV
18
STAC Incentives Project:
Customer-Owned PV Case Commercial PV – base case description
Utility – Ê pays incentive for siting in targeted congestion areas Ê facilitates interconnection Ê manages wholesale market interactions Ê receives any excess electricity (offsetting own generation or wholesale purchase) Ê receives capacity value, but pays for 50% of it Ê foregoes electricity revenues from participant
Participating PV customer – Ê pays PV capital & maintenance Ê reduces purchases of grid electricity (possibly on-peak or shoulder) Ê receives any state installation incentive and REC credits Ê receives federal tax credit
19
STAC Incentives Project:
Utility-Owned PV Case Residential PV – base case description
Utility – Ê teams with PV provider to market & install systems on customer roofs Ê owns & ratebases PV equipment, & recovers costs from all utility customers Ê provides PV maintenance, & recovers from participating PV customer Ê sells electricity to participating customer at higher ‘green’ rate Ê receives any excess electricity (offsetting own generation or wholesale purchase) Ê receives capacity value, if any Ê receives state installation incentive, if any
Participating PV customer – Ê pays utility for electricity (at green price higher than otherwise applicable tariff) Ê receives REC credits, if any 20
STAC Incentives Project – Results:
CCHP, Customer-Owned (single install)
21
STAC Incentives Project – Results:
CCHP, Utility-Owned (single install)
22
STAC Incentives Project – Results:
Comm. PV, Customer-Owned (single install)
23
STAC Incentives Project – Results:
Residential PV, Utility-Owned (single install)
24
STAC Incentives Project – Results:
Residential PV, Utility-Owned (single install) ... with Federal Investment Tax Credit
25
STAC Incentives Project – Results:
Aggregate Impacts, All Stakeholders Output from ‘single installation’ calculator
feeds into ‘aggregate impact’ calculator Aggregate impacts
are shown this way:
(Example: Utility-Owned CCHP Base Case)
From E3’s Aggregate Cost-Effectiveness Tool for clean DG, Utility Model v1d, updated 1/23/07
26
Customer-Owned DER Issues Customer-owned business cases confront –
neutralizing the ‘revenue loss’ disincentive Ê decoupling revenues from sales (e.g., CA utilities) Ê lost revenue adjustment mechanism (e.g., PSE&G PV filing) Ê not a panacea
• •
utility-wide solution; DER tail wagging the dog? removes one source of utility resistance, but only one
establishing affirmative incentives Ê capacity markets, RECs, etc. (e.g., New England, NJ) Ê tax incentives, rebates, performance payments, etc. (widespread)
creating significant financial value Ê replicability (for other DER) Ê scale (for rooftop solar) 27
Utility-Owned DER Issues Utility-owned business cases confront –
Can utilities own ‘generation’? Ê in restructured states, not always clear Ê some treat distributed generation differently
Can they enter & compete in competitive businesses? Ê Ê Ê Ê
if directed by law or regulators to advance favored policies subject to rules to prevent cross-subsidies, preserve competition usually separated from regulated activities and . . . often unsuccessfully
Can they manage customer-premises risk & liability? Ê not altogether new or different; standard tools are available
Will customers who don’t install DER be treated fairly? Ê main concern is ‘cost [burden] shifting’, but policy often permits Ê magnitude matters, & benefits can offset burdens
28
How could utility ownership work? Through teaming arrangements that –
enable stakeholders to do what each does best, most efficiently, & at least cost
minimize anti-competitive concerns
enlarge the pie for all stakeholders
29
Conclusions DER business arrangements that benefit multiple stakeholders
without harming others should be encouraged New tools are available to assess & allocate costs & benefits Where investor-owned utilities can add value & increase
beneficial DER deployment, regulation should encourage that as one option for customers who want it Utility-owned DER can reduce customer cost & risk, protect non-
participants, achieve societal goals, & yield economic DER Stakeholders increasingly value this approach – if anti-
competitive concerns are addressed & teaming is encouraged Stakeholders in California & Massachusetts have identified
potentially viable business models & regulatory approaches Our challenge is to apply them to solar, or expand solar horizons 30
Adapted from: SEPA Pre-Conference Workshop SolarPower 2007 Conference Long Beach, California September 24, 2007
Presented by: John Nimmons, J.D. SEPA Project Lead Mill Valley, CA 415.381.7310 [email protected]
Agenda What is a ‘business model’? What’s different about a utility business model? How can we evaluate utility solar business models? What work’s been done in this area, and how can solar
stakeholders build on it?
STAC Utility DER Incentives Project Ê approach and participants Ê business cases considered Ê cost/benefit analysis and tools Ê results and recommendations
What are the next steps, and how can stakeholders participate? 2
What is a ‘business model’? “Business model is one of those terms of art that were central to the internet boom: It glorified all manner of half-baked plans. All it really meant was how you planned to make money.” *
* Michael Lewis, quoted in Chesbrough, H. and Rosenbloom, R.S, The Role of the Business Model in Capturing Value from Innovation, Industrial and Corporate Change, V.11, No.3.
3
*
But there’s more . . . Delivering value may require a paradigm shift
some innovations succeed using familiar models, but ...
those models don’t always fit the technical or market opportunity, so ...
firms often need new perspectives to create, capture and deliver value from new opportunities, and ...
they often have great difficulty departing from familiar ways
“Identifying and executing a new or different business model is an entrepreneurial act requiring insight into both the technology and the market.”
* from Chesbrough, H. and Rosenbloom, R.S., The Role of the Business Model in Capturing Value from Innovation
4
A business model is ... ‘a focusing tool to mediate between technology and value’ *
Business BusinessModel Model Technical Inputs 9 solar technologies 9 applications 9 feasibility 9performance
market market value valueproposition proposition value chain value chain cost cost&&profit profit value network value network competitive competitivestrategy strategy
Economic Outputs 9 value to utility customers 9 value to shareholders 9 value to society 9revenues 9 pricing 9 profit
* from Chesbrough, H. and Rosenbloom, R.S., The Role of the Business Model in Capturing Value from Innovation
5
Utilities are different To succeed for a utility, a business model must serve multiple stakeholders’ interests the
utility’s owners
Ê IOU shareholders Ê POU citizens/voters Ê Coop members
its
customers
Ê participants Ê non-participants Ê protected groups (low-income, elderly, handicapped)
society,
or the public interest
Ê IOU regulators require it Ê POU officials represent it Ê Coop executives focus it (on members)
6
Business models & regulation
Level of Regulation
Regulation shapes business models – some more than others Pervasive economic regulation
Investor-owned Investor-owned utility utility
Political imperatives
Membership control
Publicly-owned Publicly-owned utility utility
Cooperative Cooperative utility utility
General law Mom & Pop
Small private business
Large private business
Type of Business
7
So . . . what’s a utility business model? How the utility will –
create value in the marketplace
profit by capturing a share of that value
sustain the business over time
Elements include –
utility roles
others’ roles
economic & financial impacts
regulatory treatment
• buy output • acquire projects • develop projects • own assets • provide services • incentivize others . . . • provide a site • sell &/or install equipment • develop projects • provide maintenance • buy or aggregate output . . . • value streams & magnitudes • cost/benefit allocations • project & aggregate impacts . . .
• ratebase treatment • revenue impacts • incentives . . .
8
Evaluating utility solar business models ‘Cost-effectiveness’ is the key
costs vs. benefits Ê tangible & intangible both matter Ê ideally quantifiable, but judgment plays a role
one stakeholder’s benefit is often another’s cost Ê must recognize different stakeholder perspectives
utility regulators and managers apply various tests Ê Ê Ê Ê
Participant Cost Test: Is solar worth it to the participating customer? Ratepayer Impact Measure: How will it impact utility earnings or rates? Total Resouce Cost test: What’s the net tangible benefit or cost? Societal Cost Test: Are there other societal costs or benefits, or ‘externalities’?
New assessment tools streamline the task Ê see STAC Project discussion, below
9
What’s a good utility business model? ‘Win/win/win’ is the goal net benefits ≥ net costs for each stakeholder multiple stakeholders benefit, & none are harmed
Win/win/win example:
utility pays a ‘locational credit’ to solar provider (a cost to the utility and a benefit to the provider)
credit is set at a level that makes program participant and other ratepayers better off (both PCT and RIM benefit/cost ratios > 0)
that’s good, but is it a sustainable business model? 10
Can solar build on other work? YES: the 2006-07 STAC Incentives Project ‘Creating & Demonstrating Utility Distributed Resource Incentives’
Primary sponsors
State Technologies Advancement Collaborative (USDOE/NASEO) California Energy Commission Massachusetts Technology Collaborative
One of several EPRI-led collaboratives, 2003-on
catalogued existing utility incentive programs & business approaches identified important legal & regulatory issues, & program alternatives developed sophisticated spreadsheet tools to assess benefits vs. costs for each key stakeholder group systematically explored ‘win/win/wins’ benefitting all groups defined & tested utility business models for PV & other resources 11
STAC Incentives Project:
Participants Government & Research California Energy Commission
U.S. Dept. of Energy U.S. Environmental Protection Agency Nat’l Assn. of State Energy Offices Mass. Div. of Energy Resources Mass. Technology Collaborative Mass. Dept. of Telecomm & Energy NY State Energy Research & Dev. Auth. New Jersey Board of Public Utilities Electric Power Research Institute
Customer Reps Los Angeles County Sanitation Dist.
General Services Administration Democracy and Regulation Energy Consortium
Utilities
Southern California Edison Pacific Gas & Electric San Diego Gas & Electric Edison Electric Institute National Grid Northeast Utilities NStar Tennessee Valley Authority
Public Interest Conservation Law Foundation
Conservation Services Group
Vendors/Developers Solar Turbines
Cummins Power Generation Northern Power Systems RealEnergy TurboSteam UTC Power EnerNOC
EPRI Project Team Ellen Petrill, Director
David Thimsen, Project Mgr. John Nimmons & Assoc. Madison Energy Consultants Energy & Environmental Econs. Regulatory Assistance Project 12
STAC Incentives Project:
Issues Addressed Are there viable business models for investor-owned utility participation in DER markets? – i.e., approaches that benefit:
participating customers non-participating customers the utility and its shareholders society at large
Can we quantify their stakeholder impacts – who benefits, who pays, and what drives this? What regulatory changes might be needed to support promising business models? Can we test these business & regulatory approaches in pilot projects? 13
STAC Incentives Project:
Collaborative Activities 2d stakeholder workshop Recommended state-specific pilot approaches
. . . MA & CA stakeholder discussions to identify viable pilot projects . . .
MA: Customer-owned 2-day stakeholder workshop Recommended two inquiries, with two work groups:
Project Team developed ‘strawman’ business models
. Aug
Work Group activities . . . 1. Customer-owned DER . . . 2. Utility-owned DER . . .
1. Customer-owned 2. Utility-owned
t. Se p
. Oct
. Nov
. Dec
CA: Utility-owned
. Jan
. Feb
Mar
. Apr
.
200
May
7
6 200
14
STAC Incentives Project:
Defining a ‘business model’ How the utility will –
create value in the marketplace
profit by capturing a share of that value
sustain the business over time
Elements include –
utility roles
others’ roles
economic & financial impacts
regulatory treatment
• buy output • acquire projects • develop projects • own assets • provide services • incentivize others . . . • provide a site • sell &/or install equipment • develop projects • provide maintenance • buy or aggregate output . . . • value streams & magnitudes • cost/benefit allocations • project & aggregate impacts . . .
• ratebase treatment • revenue impacts • incentives . . .
15
STAC Incentives Project:
Analyzing Costs & Benefits Working Groups worked closely with E3 (Energy & Environmental Economics, San Francisco, CA)
Previous work identified costs & benefits, including: • • • • • • •
capital cost fuel cost maintenance cost standby charge thermal payment facilities payment efficiency/non-DG eqpmt
• • • • • • •
electric bill savings gas bill savings generation capacity T&D capacity DG electricity purchase wholesale energy grid reliability
• • • • • • •
backup value avoided waste stream reduced emissions fuel cost subsidy REC credit value State incentives Federal incentives
Key analytical point:
a benefit to one stakeholder is often a cost to another 16
STAC Incentives Project:
Quantifying Costs & Benefits E3 developed 2 modeling tools for this project 1. ‘Single installation’ calculator model shows – Ê who benefits and who pays for various types of DER Ê whether benefits exceed costs for each stakeholder group Ê which benefits and costs drive the outcome
2. ‘Aggregate impact’ calculator model shows the impacts of variable DER penetration levels on – Ê utility revenues or customer bills Ê utility rates
Ê utility net income Ê utility return on equity Ê net societal savings
Both allow flexible manipulation of variables, and offer sophisticated screening tools 17
STAC Incentives Project:
Business Cases Considered All DER installed on customer premises, but some on the utility side of the meter
Customer-owned
(& utility-facilitated)
Combined cooling, heating & power (CCHP) Commercial rooftop PV
Utility-owned
(& provider-allied)
CCHP, on either side of the meter Biogas, from dairy or other customer operations Residential rooftop PV
18
STAC Incentives Project:
Customer-Owned PV Case Commercial PV – base case description
Utility – Ê pays incentive for siting in targeted congestion areas Ê facilitates interconnection Ê manages wholesale market interactions Ê receives any excess electricity (offsetting own generation or wholesale purchase) Ê receives capacity value, but pays for 50% of it Ê foregoes electricity revenues from participant
Participating PV customer – Ê pays PV capital & maintenance Ê reduces purchases of grid electricity (possibly on-peak or shoulder) Ê receives any state installation incentive and REC credits Ê receives federal tax credit
19
STAC Incentives Project:
Utility-Owned PV Case Residential PV – base case description
Utility – Ê teams with PV provider to market & install systems on customer roofs Ê owns & ratebases PV equipment, & recovers costs from all utility customers Ê provides PV maintenance, & recovers from participating PV customer Ê sells electricity to participating customer at higher ‘green’ rate Ê receives any excess electricity (offsetting own generation or wholesale purchase) Ê receives capacity value, if any Ê receives state installation incentive, if any
Participating PV customer – Ê pays utility for electricity (at green price higher than otherwise applicable tariff) Ê receives REC credits, if any 20
STAC Incentives Project – Results:
CCHP, Customer-Owned (single install)
21
STAC Incentives Project – Results:
CCHP, Utility-Owned (single install)
22
STAC Incentives Project – Results:
Comm. PV, Customer-Owned (single install)
23
STAC Incentives Project – Results:
Residential PV, Utility-Owned (single install)
24
STAC Incentives Project – Results:
Residential PV, Utility-Owned (single install) ... with Federal Investment Tax Credit
25
STAC Incentives Project – Results:
Aggregate Impacts, All Stakeholders Output from ‘single installation’ calculator
feeds into ‘aggregate impact’ calculator Aggregate impacts
are shown this way:
(Example: Utility-Owned CCHP Base Case)
From E3’s Aggregate Cost-Effectiveness Tool for clean DG, Utility Model v1d, updated 1/23/07
26
Customer-Owned DER Issues Customer-owned business cases confront –
neutralizing the ‘revenue loss’ disincentive Ê decoupling revenues from sales (e.g., CA utilities) Ê lost revenue adjustment mechanism (e.g., PSE&G PV filing) Ê not a panacea
• •
utility-wide solution; DER tail wagging the dog? removes one source of utility resistance, but only one
establishing affirmative incentives Ê capacity markets, RECs, etc. (e.g., New England, NJ) Ê tax incentives, rebates, performance payments, etc. (widespread)
creating significant financial value Ê replicability (for other DER) Ê scale (for rooftop solar) 27
Utility-Owned DER Issues Utility-owned business cases confront –
Can utilities own ‘generation’? Ê in restructured states, not always clear Ê some treat distributed generation differently
Can they enter & compete in competitive businesses? Ê Ê Ê Ê
if directed by law or regulators to advance favored policies subject to rules to prevent cross-subsidies, preserve competition usually separated from regulated activities and . . . often unsuccessfully
Can they manage customer-premises risk & liability? Ê not altogether new or different; standard tools are available
Will customers who don’t install DER be treated fairly? Ê main concern is ‘cost [burden] shifting’, but policy often permits Ê magnitude matters, & benefits can offset burdens
28
How could utility ownership work? Through teaming arrangements that –
enable stakeholders to do what each does best, most efficiently, & at least cost
minimize anti-competitive concerns
enlarge the pie for all stakeholders
29
Conclusions DER business arrangements that benefit multiple stakeholders
without harming others should be encouraged New tools are available to assess & allocate costs & benefits Where investor-owned utilities can add value & increase
beneficial DER deployment, regulation should encourage that as one option for customers who want it Utility-owned DER can reduce customer cost & risk, protect non-
participants, achieve societal goals, & yield economic DER Stakeholders increasingly value this approach – if anti-
competitive concerns are addressed & teaming is encouraged Stakeholders in California & Massachusetts have identified
potentially viable business models & regulatory approaches Our challenge is to apply them to solar, or expand solar horizons 30
