SEPA released its national Utility Solar Rankings executive summary at the Utility Solar Conference (USC) earlier in April. The not-unexpected headline was ‘more solar megawatts for more utilities in more states’ for all project sizes, residential through utility-scale. The natural focus is on megawatts. They drive market capitalization. They drive state and utility comparisons. Megawatts are oh-so sexy in that geeky solar-utility way.
However, I find myself more fascinated by another side of the data - the number of PV systems installed. The number of photovoltaic (PV) systems is the byline for how solar is completely different from any other electric generating technology that utilities are integrating, be it coal, gas, or wind.
U.S. utilities reported over 90,000 systems installed in 2012. This brings the total to over 303,000 nationally. Twenty-five utilities reported interconnecting more than 500 systems last year; sixteen did more than 1,000; five did more than 5,000. More than 5% of the customers of the Hawaiian Electric Company have PV systems. These are harbingers of what’s to come - at modest growth rates, 1 million PV systems will be reached within five years.
How does this compare to other utility power plant metrics? Look at this graphic from the Energy Information Administration:
It shows the total number of power plants greater than 1 megawatt by state. How many do they add up to? Just over 6,3501. Think about that - 6,300 non-solar versus 303,000 solar power plants, the latter of which is growing by tens and soon hundreds of thousands per year. To be fair, this is not a megawatt-to-megawatt comparison - the average solar system size is 20 kilowatts. But the decentralization of electricity generation has started. Which begs the question, what implications does this have for utilities?
First, the staffing needs to process and interconnect these systems are growing. This was the focus of a panel that I moderated at USC on streamlining interconnection processes. One utility reported not having the manpower to inspect any of the more than 1,000 systems they interconnected last year, even sizes up to 2 megawatts. There was an audible gasp from the utility audience. Others reported significant numbers of high penetration distribution feeders that require additional studies to ensure operational reliability. Utilities will have to find the right balance between safety, operational and process efficiency needs. Moving to online and electronic interconnection processing was one clear solution that resonated with many utilities in the audience.
Second, utilities will need to more actively incorporate distributed solar into generation, transmission and distribution planning. This need will vary widely, but PV will begin to change load-shapes for customers, shifting their usage peak later in the day, and in turn the system peak further into the evening as penetration increases. Absent economical storage options or other strategies to better align solar production with customer energy consumption patterns, the ‘capacity value’ for solar will shrink over time, changing the value proposition often cited by stakeholders. SEPA and the National Renewable Energy Lab (NREL) are engaged in a utility solar planning study that in part will address how utilities incorporated distribution system impacts into utility integrated resource planning.
Third, utilities need to recognize the changing expectations of these hundreds of thousands of solar customers, and the hundreds of thousands of future solar customers. Solar customers want electricity choices, positive value propositions for their investments, and are more inquisitive and vocal than the average utility customer. They will drive shifts in the way utilities think – from simply delivering electrons to providing electricity services to customers.
As was referenced at USC, Kodak thought they were in the film manufacturing business, when they really should have recognized that they were in the business of recording memories. In fact, Kodak was a leader in digital photographic technology development - they weren’t blind-sided by technology. It was their inability to adapt internally and refocus their business direction that was their demise - the traditional film side of the business drove corporate decision-making with disastrous results.
This may or may not play out in electricity markets - certainly the unregulated film business is much different than the regulated electricity business. But solar market growth should be raising strategic questions and planning for those utilities in the most solar active states. SEPA serves its members by seeking to drive these conversations, engage those that are planning for the future, and empower utilities with the information they need in this exciting business transformation.
SEPA will release its full Utility Solar Rankings report at the beginning of June. Visit www.sepatop10.org for updates.
1About 400 solar power plants (>1 MW) are included. This is probably incomplete since awareness and compliance with EIA reporting requirements is likely low among solar installation owners.