Value of Solar Bill Grant
Minnesota Value of Solar SEPA Utility Solar Conference April 29, 2014 Bill Grant, Deputy Commissioner Minnesota Department of Commerce, Division of Energy Resources
MN Value of Solar Methodology 2013 Legislation required the Department of Commerce to develop a methodology to quantify the value components of distributed solar electricity that must include the value of:
energy and its delivery, generation capacity, transmission capacity, transmission and distribution line losses, and environmental value.
MN Value of Solar Methodology Investor Owned Utilities may apply to the MN PUC for a VOS tariff: • in lieu of Net Metering for solar PV < 1MW • that charges the customer for electricity consumed at the customer’s retail rate • that compensates the customer through a bill credit for the value to the utility, its customers, and society using the established VOS methodology.
Approach for MN VOS Methodology Objectives: • Accurately account for all relevant value streams (benefits net of costs) from a societal perspective; • Simplify the methodology and input data sets (where possible and warranted); • Provide transparency; and • Facilitate modification, if necessary, in future years.
Development and Review Process The Department of Commerce designed and led an extensive stakeholder process in Fall 2013, incorporating significant national experience and expertise including: – Clean Power Research – Technical and analytical support; – Rocky Mountain Institute – Meta-analysis of Solar PV Benefit & Cost Studies; – Rabago Energy – Austin Energy VOST experience.
Commerce developed a draft methodology and submitted it to the Public Utilities Commission in January.
On March 12, 2014, the Minnesota Public Utilities Commission voted to approve the Methodology.
MN VOS Stakeholder Engagement • Sept 17, 2013: Workshop 1: Overview of National Efforts on Solar PV Benefit & Cost Studies • Sept 20, 2013: Initial Comments these comments were used to frame the Oct 1 workshop
• Oct 1, 2013: Workshop 2: Proposed approach to methodology, Stakeholder perspectives, Identification of key issues
• Oct 8, 2013: Comments on key issues these comments were used to frame the Oct 15 workshop
• Oct 15, 2013: Workshop 3: Discussion of key issues, Facilitated discussion with stakeholders
• Nov 19, 2013: Workshop 4: Presentation of Initial Draft Methodology
• Dec 10, 2013: Comments on draft methodology informed the final draft methodology that the Department submitted to the PUC
MN PUC review process • Jan 31, 2014 Department submitted the VOS Methodology to the PUC (Docket 14-65) • Feb 13, 2014 Initial Comments Due to PUC • Feb 20, 2014 Reply Comments Due to PUC • Mar 4, 2014
Information Hearing
• Mar 12, 2014 Testimony and Deliberations – PUC voted to approve the Methodology • Apr 1, 2014 PUC issued its order approving the Value of Solar Methdology.
Key Points for MN VOS The MN VOS Methodology is based on the enabling statute, input from four stakeholder workshops, more than 50 sets of written comments, and Department analysis. Separates customer electricity usage and production: – Customers are billed for all electricity usage under their existing applicable tariff and are credited for all solar energy production under the approved VOS tariff.
Is expressed in a present value, $ per kWh, for a 25-year levelized stream.
Key Points for MN VOS Provides a rigorous analytical foundation for valuing distributed solar energy that can be updated and adjusted over time – VOS Methodology is clear and specific; – Annual adjustments to the valuation (for each new annual group of VOS tariff customers) prevents overor under- payment as utility costs change; – The Methodology can be updated as needed to incorporate the best available practices.
Is not an incentive for distributed PV, nor is it intended to eliminate or prevent current or future incentive programs.
Transparency Elements for MN VOS The Methodology incorporates two tables that are to be included in a utility’s application to the Commission for use of a VOS tariff: 1. VOS Data Table – Utility specific input assumptions
2. VOS Calculation Table – List of value components and their gross values, their load match factors, their loss savings factors, and the computation of the total levelized value
Example Results for MN VOS
Lessons Learned • VOS may be a good alternative to net metering • VOS addresses cross-subsidy concerns • VOS may not be compatible with thirdparty business models • Good to involve all stakeholders in the development of the methodology and resulting tariff
Next Steps • VOS calculation by Xcel for Community Solar Gardens program (by May 1st) • Xcel request for reconsideration disputes methodology for valuation • Will utilities opt for VOST?
Thank You.
Questions?
More information… • Workshop presentations, stakeholder comments, draft, and final methodology are posted on the Commerce website at: www.energy.mn.gov • search for: • “MN VOS”, or • “MN Energy Legislation Initiatives”
MN Value of Solar Methodology 2013 Legislation required the Department of Commerce to develop a methodology to quantify the value components of distributed solar electricity that must include the value of:
energy and its delivery, generation capacity, transmission capacity, transmission and distribution line losses, and environmental value.
MN Value of Solar Methodology Investor Owned Utilities may apply to the MN PUC for a VOS tariff: • in lieu of Net Metering for solar PV < 1MW • that charges the customer for electricity consumed at the customer’s retail rate • that compensates the customer through a bill credit for the value to the utility, its customers, and society using the established VOS methodology.
Approach for MN VOS Methodology Objectives: • Accurately account for all relevant value streams (benefits net of costs) from a societal perspective; • Simplify the methodology and input data sets (where possible and warranted); • Provide transparency; and • Facilitate modification, if necessary, in future years.
Development and Review Process The Department of Commerce designed and led an extensive stakeholder process in Fall 2013, incorporating significant national experience and expertise including: – Clean Power Research – Technical and analytical support; – Rocky Mountain Institute – Meta-analysis of Solar PV Benefit & Cost Studies; – Rabago Energy – Austin Energy VOST experience.
Commerce developed a draft methodology and submitted it to the Public Utilities Commission in January.
On March 12, 2014, the Minnesota Public Utilities Commission voted to approve the Methodology.
MN VOS Stakeholder Engagement • Sept 17, 2013: Workshop 1: Overview of National Efforts on Solar PV Benefit & Cost Studies • Sept 20, 2013: Initial Comments these comments were used to frame the Oct 1 workshop
• Oct 1, 2013: Workshop 2: Proposed approach to methodology, Stakeholder perspectives, Identification of key issues
• Oct 8, 2013: Comments on key issues these comments were used to frame the Oct 15 workshop
• Oct 15, 2013: Workshop 3: Discussion of key issues, Facilitated discussion with stakeholders
• Nov 19, 2013: Workshop 4: Presentation of Initial Draft Methodology
• Dec 10, 2013: Comments on draft methodology informed the final draft methodology that the Department submitted to the PUC
MN PUC review process • Jan 31, 2014 Department submitted the VOS Methodology to the PUC (Docket 14-65) • Feb 13, 2014 Initial Comments Due to PUC • Feb 20, 2014 Reply Comments Due to PUC • Mar 4, 2014
Information Hearing
• Mar 12, 2014 Testimony and Deliberations – PUC voted to approve the Methodology • Apr 1, 2014 PUC issued its order approving the Value of Solar Methdology.
Key Points for MN VOS The MN VOS Methodology is based on the enabling statute, input from four stakeholder workshops, more than 50 sets of written comments, and Department analysis. Separates customer electricity usage and production: – Customers are billed for all electricity usage under their existing applicable tariff and are credited for all solar energy production under the approved VOS tariff.
Is expressed in a present value, $ per kWh, for a 25-year levelized stream.
Key Points for MN VOS Provides a rigorous analytical foundation for valuing distributed solar energy that can be updated and adjusted over time – VOS Methodology is clear and specific; – Annual adjustments to the valuation (for each new annual group of VOS tariff customers) prevents overor under- payment as utility costs change; – The Methodology can be updated as needed to incorporate the best available practices.
Is not an incentive for distributed PV, nor is it intended to eliminate or prevent current or future incentive programs.
Transparency Elements for MN VOS The Methodology incorporates two tables that are to be included in a utility’s application to the Commission for use of a VOS tariff: 1. VOS Data Table – Utility specific input assumptions
2. VOS Calculation Table – List of value components and their gross values, their load match factors, their loss savings factors, and the computation of the total levelized value
Example Results for MN VOS
Lessons Learned • VOS may be a good alternative to net metering • VOS addresses cross-subsidy concerns • VOS may not be compatible with thirdparty business models • Good to involve all stakeholders in the development of the methodology and resulting tariff
Next Steps • VOS calculation by Xcel for Community Solar Gardens program (by May 1st) • Xcel request for reconsideration disputes methodology for valuation • Will utilities opt for VOST?
Thank You.
Questions?
More information… • Workshop presentations, stakeholder comments, draft, and final methodology are posted on the Commerce website at: www.energy.mn.gov • search for: • “MN VOS”, or • “MN Energy Legislation Initiatives”
