HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 06/28/2022 - SOLAR 120 PERCENT SIZING RULE AND RATESDATE:
STAFF:
June 28, 2022
John Phelan, Energy Services Manager
WORK SESSION ITEM
City Council
SUBJECT FOR DISCUSSION
Solar 120 Percent Sizing Rule and Rates.
EXECUTIVE SUMMARY
The purpose of this work session is to seek Council direction regarding revisions to the solar sizing limitations in
code and for feedback on related strategies for solar credit rates. The overall objectives for local solar polic y and
practice are twofold: 1) to support scaled up adoption in alignment with Our Climate Future and resource planning
targets; with 2) a sustainable and equitable funding for Utilities customer service, operations and infrastructure.
The existing sizing requirement articulated in City Code limits new solar systems to provide no more than 120% of
a customer’s historical use (the 120% Rule). The purpose of the rule is to function as a financial limit, based on
legacy metering and rate structures. Reconsider ation of the 120% Rule aligns with Utilities pathways towards
solar pricing policies that better align with 2030 renewable goals.
Staff is asking for Council feedback regarding replacing the 120% Rule with administrative policies that support
Our Climate Future goals and for guidance regarding solar credit rates through 2030.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Does Council support replacing the 120% solar sizing limit in code with administrative policies that support
customer solar goals and align with Our Climate Future targets?
2. Does Council support maintaining solar credit values and consideration of eliminating the tier rate component
to balance achieving renewable goals and customer value with limiting negative equity impacts?
3. What other feedback does Council have regarding local solar?
BACKGROUND / DISCUSSION
Policy Alignment
The overall objectives for distributed solar in Fort Collins are to enable scaling up of solar and distributed energy
resource (DER) adoption while ensuring sustainable and equitable funding for Utilities customer service,
distribution operations and infrastructure needs.
Our Climate Future articulates a goal of providing a minimum of five percent of the community’s electricity from
local renewable sources. Platte River Power Authority’s (Platte River) most recent resource plan also shows a
significant contribution from local solar across the four owner communities. These goals imply continued
expansion of local solar systems by approximat ely 2.5 times the current installed capacity.
Solar in Fort Collins
There are four categories of local solar in Fort Collins. Local solar is defined as systems that are installed within
the Utilities distribution system.
• Residential rooftop systems comprise the largest number of systems and the largest capacity. There are
currently over 2,770 homes with solar systems, reaching 17.6 megawatts.
June 28, 2022 Page 2
• Commercial / institutional systems are located on property or buildings of commercial and institutional
customers. There are currently 89 systems, reaching 4.3 megawatts.
• Community Solar is comprised of two systems; the Riverside (660 kilowatts) and Loomis Low-Income (60
kilowatts) projects. The Riverside system has approximately 200 residential owners with i ndividual shares.
The benefits of the Loomis system accrue and are distributed to participants of the Income Qualified
Assistance Program (IQAP).
• Solar Power Purchase Program (SP3) systems were deployed between 2014 and 2020 and is comprised of
16 systems, totaling 4.9 megawatts. The generation of SP3 systems is partially allocated to the Green Energy
Program with the majority accruing to all customers.
The current focus on the 120% Rule discussion before Council pertains to residential systems. The re are also
solar credit rate recommendations that apply to commercial customers.
Table 1 shows the dramatic growth of residential solar, comparing 2005 with 2017 and 2022 year to date. The
implication of this growth is that the administration of solar h as become part of the normal operations of Utilities.
This includes interconnection, agreements, rates, customer service and communications. Figure 1 illustrates the
growth of all solar types in Fort Collins between 2005 and 2021. According to the Colorado Solar and Storage
Association, Fort Collins is the top municipal utility for solar adoption and in the top three of all utilities in the state.
By the end of 2022, Fort Collins is expected to have over 30 megawatts of solar installed, or nearly 10% of tot al
peak capacity. More information on Fort Collins solar programs can be found at fcgov.com/solar.
Table 1: Growth of Residential Solar: Data for 2005, 2017 and 2022
2005 2017 2022
Number of systems 5 892 2,769
Total capacity (kW) 10 4,829 17,676
Avg size (kW) 2.2 6.7 6.8
Cost per watt $9.70 $3.67 $4.11
Rebate max $4,000 $1,500 $1,000
Annual installs 5 252 561
Solar credit budget NA $140k $984k
Rate structure Flat Tiered Time-of-Day
June 28, 2022 Page 3
Figure 1: Local Solar Capacity 2005 to 2021
Solar Net Metering Rate
Residential homes with solar use the same metering and time-of-day (TOD) consumption rates as all other
residential customers. There is also a solar credit TOD structure with specific rates for seasonal on and off -peak
periods. The advanced meters measure and record the electric net consumption of the home every fifteen
minutes. If the use is greater than the solar generation then the customer purchases energy from the grid. When
the use is less than the solar generation the customer is exportin g energy to the grid.
Each electricity amount (used or exported) has a rate value applied. The sum of all the charges and credits are
resolved every month on the customer bill. All residential customers also pay a monthly fixed charge that supports
a portion of Utilities’ costs of operation. Financial value from net exported electricity is applied as a credit to
customers’ accounts. This financial credit offsets other utility services charges on their monthly bill (e.g., water,
wastewater and stormwater); and each enterprise fund is accounted for separately and there is no direct transfer
between the funds.
The tier charge that is part of the TOD rate structure for gas -heated homes has the effect of reducing the solar
credit compared to the TOD rates for all-electric homes. The tier charge also has a negative impact on
June 28, 2022 Page 4
electrification objectives. As noted in the next steps, staff intend to bring to Council a summary of the expected
benefits of removing the tier rate component beyond the impact on solar cr edits.
Customers typically see substantial seasonal differences in their electricity use, solar generation and the
associated utility bills. For the average solar home over the course of a year, approximately 50% of the solar
generation is used directly in the home. The self-consumed portion of solar generation reduces customer bills with
the full TOD consumption value (aka full retail rate). At the same time, the balance of solar electricity that is
exported from the home is then sold to other customers at the retail rate.
What is the 120% Rule?
The 120% rule limits the size of a solar system to produce no more than 120% of a customer’s historical use. It is
one of several checks on sizing a solar system and is defined in Chapter 26 of the municipal c ode. The original
intent of the 120% Rule is to support customers who want to self-generate electricity in an amount that matches
their typical annual use and enables them to offset their electric bill. The rule’s underlying assumption is that retail
rates are used for net metering credit.
120% Rule Key Points
• The intent is a financial limit and not related to distribution system requirements or capacity.
• The rule is defined in Fort Collins municipal code and was aligned with state statute until last year.
• The rule is applied only at the time of solar system interconnection application and is not tracked or calculated
for subsequent homeowners.
• Over 90% of solar applications are already within these sizing limits.
• There is also reference to 120% sizing in the Platte River Power Supply Agreement that applies in
circumstances where the solar system is not owned by the customer.
• Additional sizing limitations on solar systems include the National Electric Code (NEC) related to the home’s
electric panel and the customer service entrance capacity.
Why Replace the 120% Code Language with Administrative Policies
The 120% Rule has been an effective tool for many years. However, new practices are needed that will better
serve updated community climate and renewable strategies along with advanced metering and time-based rates
already in place. Utilities and Platte River are planning for widespread solar adoption by 2030 with an estimated
5,000 to 7,000 solar systems in place providing between 60 and 75 megawatts of capacity.
More flexible rules for solar that can accommodate systems that would exceed the current 120 Rule limits will:
• Encourage solar systems that serve increased use from electrification (e.g., electric vehicles, heat pumps).
Customers are regularly inquiring about sizing their solar systems to accommodate increased usage as they
electrify their home heating, cooking and transportation. These electrification strategies are a key strategy for
Our Climate Future and will be essential to reducing emissions from natural gas and petroleum.
• Accelerate local solar contribution to reaching community renewable electricity goals. The increased size of
solar systems envisioned supports the ambitious target of reaching 100% renewable electricity . With aligned
rate and incentive components, this is an effective approach to leverage customer interest and investment.
• Simplify and streamline solar application and interconnection processes for customers, solar trade allies and
staff. The 120% Rule adds multiple evaluation steps to the solar application process for all parties without
providing significant short or long-term benefit.
Additional rationale for replacing the 120% Rule include:
• The Rule is applied as a one-time estimate when a new solar application is received. It represents only a
snapshot of the home and current customer. The Rule does not take into account a customer’s future
potential electrification, nor can it be used for customers without a use history (e.g., new home or recen t
move). There is no tracking of usage as homes with solar change ownership or when a customer’s household
situation changes.
June 28, 2022 Page 5
• As solar has become common, residents are purchasing existing homes with solar and the sizing of the
system may not be aligned with the new household’s usage.
• The rule has been mis-perceived as a limit on the total amount of solar allowed in Fort Collins. This is false,
as each customer has the right to self-generate. The rule is intended to limit an individual customers’ abilit y to
use their solar as a generation asset, which receives retail pricing for electricity production well above their
own use.
Utility Solar Financials
Full retail net metering was an effective strategy for promoting distributed solar systems during the early adopter
phase of deployment. Fort Collins has moved well beyond the early adopter phase for solar installations and has
already made several substantive changes from the traditional implementation of the net metering with full retail
rates financial model. These changes include:
• When the advanced meter deployment was completed in 2013, the metering and billing was changed to that
described above, with a fixed rate for solar credits.
• When the TOD rate came into effect in 2018, the solar credit values were adapted to the on and off-peak
structure with seasonal variations.
• The solar credit rate was held constant for the last several years when the retail rate increased. This is the
primary rate strategy noted in the recommendations section below. This value is currently between 0.8 and
1.93 cents lower than the consumption rate (depending on TOD period and season)
One of the key questions for a sustainable solar financial model is: Are solar customers paying their share of
utility operational costs? It has been well understood and documented that “old” net metering with full retail value
results in a partial cost shift from solar to non-solar customers. As described above, Fort Collins has already
moved beyond this model with advanced bi-directional net metering and TOD consumption and credit rates.
However, the current model still has exported solar electricity purchased at near retail and then sold to other
customers at retail. The difference between these values for the amount of exported solar electricity does not
cover a portion of Utilities operating costs and represents additional burden paid for by non-solar customers.
Using 2021 data, this solar rate deficit was approximately $300,000. To provide some context for this amount, it is
0.5% of the residential revenue of Light & Power. However, it adds approximately 40 cents per month on the bills
of non-solar residential customers. With the expected growth in solar, this value will scale up to about $1 per
month by 2030 in absence of changes to the current model.
Other information regarding solar rate equity:
• The portion of the rate called the distribution facilities charge supports ongoing utility operations independent
of the amount of electricity sold. The current value of this charge f or residential cost of service is 3.3 cents per
kilowatt-hour.
• Ongoing utility operations also are supported by the monthly base charge. This charge is the same for all
customers in the same rate class, including solar customers. However, the base char ge only covers a portion
of the non-variable operation costs of Utilities, with the remainder coming from the distribution facilities
charge.
• Solar customers use all aspects of the distribution system and utilities operations to the same extent than
non-solar customers. As such, they should be contributing to operational costs at a similar level.
Rate Mechanisms for Sustainable and Scalable Solar
The advanced metering in place in Fort Collins allows for time differentiated directional rates to be appl ied that
can simultaneously support customer solar value, financial sustainability for operations and equity between solar
and non-solar customers. The mechanisms with which to optimize these outcomes over time include:
• Maintaining the solar credit rate level as retail rates increase over time with a target of having the credit rate
equal to wholesale electricity rates by 2030. This approach has no reduction in the current benefit for existing
solar customers. This tactic would also not change the value of the benefit for self-consumed solar as it would
June 28, 2022 Page 6
increase with retail rates. When the solar credit rate is aligned with wholesale costs, the equity issue is
resolved.
• Considering removal of the tier component from the TOD rate. The primary purpose of this tactic is to align
with electrification goals. However, it would also result in a recalculation of the solar credit rate at a slightly
higher level that would become the new reference point for the credit.
• Continuing with the normal annual review o f all rate components as they relate to solar, including the base
charges, solar credit rate, distribution facilities charges and TOD charges. This annual review allows for fine
tuning of the sustainable funding and equity outcomes as wholesale rates and f uture electricity markets
evolve in the next several years.
Recommendations
Table 2 lays out specific recommendations for the related topics of solar sizing limits and rate compensation.
Figure 2 illustrates the principles articulated below for gradual rate changes, using a blended cost per kilowatt-
hour.
Table 2: Solar Sizing and Rate Recommendations
Recommendations Benefits Key points
Near term (this year)
1 Replace 120% rule in code with
administrative model
Electrification alignment
and streamlined processes
Clear community support
Aligns with Our Climate
Future
2 Maintain solar credit rate as the
consumption rate increases
Address equity and reduce
impacts to non-solar
customers
Target solar credit equal
to wholesale by ~2030.
Review annually with rate
ordinances
3 Remove tier component from time-of-
day rate structure
Encourages electrification,
recalculated solar credit
Aligns solar,
electrification and rate
equity objectives
4 Revise the commercial solar credit
rate logic similar to residential
Enable more small
commercial solar projects
Current credit rate is
outdated and very low
Longer term
5 Consider new solar business models
with Platte River
Potential new ownership
models
May require revisions to
Power Supply Agreement
June 28, 2022 Page 7
Figure 2: Illustration of Solar Credit Rate Recommendation
NEXT STEPS
Pending Council feedback and direction, staff will:
• Bring forward specific language for revising City Code with regards to the Solar 120% Rule and it’s
replacement by an administrative model for flexibly managing solar sizing;
• Deliver a written summary to Council regarding the anticipated benefits of removing the tier component of the
TOD rate for electrification, customer service and solar, and
• Prepare related options for the fall electric rate ordinances that support solar and electrification goals.
ATTACHMENTS
1. Council Memo, May 2021 (PDF)
2. Utilities Solar Customer Fact Sheet (PDF)
3. Powerpoint Presentation (PDF)
Utilities
electric · stormwater · wastewater · water
222 Laporte Ave.
PO Box 580
Fort Collins, CO 80522-0580
970.212.2900
V/TDD: 711
utilities@fcgov.com
fcgov.com/utilities
DATE: May 13, 2021
TO: Mayor and City Councilmembers
FROM: Gretchen Stanford, Interim Utilities Deputy Director, CCSU
John Phelan, Energy Services Senior Manager
THROUGH: Darin Atteberry, City Manager
Kelly DiMartino, Deputy City Manager
Theresa Connor, Interim Utilities Executive Director
RE: Solar 120 Percent Rule
Bottom Line
The Solar 120 Percent Rule (120 Rule) is one of several checks on sizing a new solar system.
The purpose of the 120 Rule is a financial check related to the associated rate structure based on
full-retail net metering. Utilities is on a defined path towards solar installation and pricing
policies that align to the objective of reaching 100% renewable electricity by 2030 and
incorporating wholesale and distribution level costs and benefits that support future elimination
of the 120 Rule.
This memo provides detailed background on the 120 Rule, the state of solar in Fort Collins,
issues with the 120 Rule and net metering, and outlines proposed next steps.
Background
What is the 120 Rule?
The 120 Rule is one of several checks on sizing a solar system and is defined in Chapter 26 of
the municipal code. The intent of the 120 Rule is to support customers who want to self-generate
electricity in an amount that matches their typical annual use and enables them to offset their
electric bill.
The 120 Rule is commonly used by utilities and is modeled on the Colorado Public Utilities
Commission’s (PUC) regulatory net metering cap, which sets a system capacity modeled to
generate 120% of the residential customers’ annual average consumption as an appropriately
sized solar system. Additional sizing limitations on new solar systems include the National
Electric Code (NEC) related to the home’s electric panel, the Utilities Service Entrance Capacity
and potentially the local electric transformer capacity. Legislation currently under consideration
may revise the 120% rule (SB21-261).
ATTACHMENT 1
The 120 Rule is not associated with electrical safety but is strictly focused on managing the
financial risks of ubiquitous distributed solar on non-solar customers.
How does solar work in Fort Collins?
There are over 2,200 solar systems connected to the Fort Collins electric distribution system,
with the first systems installed in 2008. Approximately 2,100 are residential and approximately
400 new systems are expected to be added this year.
The advanced meters measure and record the electric net consumption of the building every
fifteen minutes when the use is greater than the solar generation and the net returned from the
building when the solar generation is greater than the use. Utilities rates define pricing for both
the net charges and net credits for energy in the time-of-day (TOD) structure. All residential
customers also pay a monthly fixed charge that supports a portion of Utilities’ costs of operation.
Customers will typically see substantial seasonal differences in their electricity use, solar
generation and the associated utility bills.
Financial value from net returned electricity is applied as a credit to customers’ accounts and is
used to offset other utility services charges on their monthly bill (e.g., water, wastewater and
stormwater). If customers have more than $300 in account credit on an annual basis, they can
receive a payment from Utilities for the balance.
Issues with the 120 Rule
There are several issues, or challenges, that are associated with the 120 Rule, including:
x The Rule is applied as a one-time estimate when a new solar application is received. It
represents only a snapshot of the home and current customer. The Rule does not take into
account a customer’s future potential electrification, nor can it be used for customers
without a use history (e.g., new home or recent move).
x As solar becomes more common, residents are purchasing existing homes with solar and
the sizing of the system may not be aligned with the new household’s usage.
x The rule is perceived as an attempt to limit the total amount of solar. This is false, as each
customer has the right to self-generate. The rule is intended to limit customers’ ability to
become a generation asset, which receives retail pricing for electricity production well
above their own use.
Issues with the Full Retail Net Metering
Full retail net metering has a strong history of advocacy as an effective economic incentive to
promote distributed solar. As Fort Collins moves from the early adopter phase for solar
installations, there are several issues, or challenges, that are associated with this model,
including:
x Based on simple models of total revenue and purchased power costs, Utilities is not
recovering approximately three cents ($0.03) per kilowatt-hour of revenue from solar
customers for solar generation. This portion of the rate is called the distribution facilities
charge and it supports ongoing utility operations independent of the amount of electricity
sold.
x Ongoing utility operations also are supported by the monthly fixed charge. This charge is
the same for all customers in the same rate class, including solar customers. However, the
fixed charge only covers approximately one-third of the non-variable operation costs of
the utility, with the remainder coming from components of the rates based on use.
x Solar customers use all aspects of the distribution system and utilities operations to the
same extent, if not more, than non-solar customers. As such, they should be contributing
to the fixed costs at a similar level.
x To the extent that solar customers are contributing less to the fixed cost requirements,
other customers are picking up the tab. While this is not currently creating serious
financial issues, it is important to recognize that the current model is not sustainable for
equitable support of distribution system operations and maintenance if continued
indefinitely.
Current solar rates and path to eliminate the 120 Rule
Utilities is on a defined path towards solar installation and pricing policies that align to the
objective of reaching 100% renewable electricity by 2030 and incorporating wholesale and
distribution level costs and benefits that support future elimination of the 120 Rule. This path
includes:
x Solar customers net usage is charged the time-of-day (TOD) price per kilowatt-hour per
the customers rate class. As such, the solar energy generated that is immediately used in
the home will continue to have full retail value by offsetting initial charges.
x Starting in 2020, Utilities has held flat the distribution facilities charge element of the net
metering returned energy rate. With this change, the net export value of solar electricity is
approximately one cent ($0.01) less per kilowatt-hour. This is a gradual approach to
make solar pricing sustainable at scale and was supported by the solar industry.
x Remaining steps on the path include:
o Creating a formula for adjusting excess annual solar generating credit from a
retail to wholesale electricity value. This step will allow for solar overgeneration
and remove the core rationale for the 120 Rule, e.g., to manage system financial
risks.
o Continuing to gradually increase the differential between the charge and credit
values of the distribution facilities charge. The target for this differential is
approximately three cents ($0.03) at today’s pricing.
o Considering increasing the monthly fixed charge over time, for all customers, to
support predictable revenue for ongoing operations that is independent of the total
amount of electricity sold.
Next steps
x Staff will propose migrating the annual excess credit model to wholesale values (fall
2021 rate and City Code updates)
x Continue gradually increasing the monthly fixed charge and differential between charge
and credit values of the distribution facilities charge. This is typically done as a part of
annual rate adjustment discussions with Council in the fall.
x Consider formalizing a timeline to sunset the 120 Rule.
Additional information
x The NEC has rules related to solar sizing and home electric panel capacity that are called
“the 120% rule.” This is unrelated to the utility use of the 120 Rule and can be a source of
confusion.
x The 120 Rule is not related to Fort Collins’ operating agreements with Platte River Power
Authority, except when a solar project chooses to use a third party power purchase
agreement to finance their on-site solar system. This specific instance of the 120%
limitation is in the Power Supply Agreement and is intended to apply to commercial
installations.
x More information on how Fort Collins solar programs work can be found at
fcgov.com/solar.
CC: Tim McCollough, Utilities Deputy Director, Light & Power
Lance Smith, Utilities Finance Director
Cyril Vidergar, Assistant City Attorney
Randy Reuscher, Rate Analyst
Leland Keller, Energy Services Engineer
v1.2, 1/15/2021
Utilities
electric · stormwater · wastewater · water
222 Laporte Ave.
PO Box 580
Fort Collins, CO 80522-0580
970.212.2900
V/TDD: 711
utilities@fcgov.com
fcgov.com/utilities
Residential Solar Fact Sheet
This document shall be incorporated into every residential solar PV system proposal provided by
a Participating Solar Contractor. A signed copy is required to be submitted with the solar interconnection
application whether the customer seeks a solar rebate or not.
Customers considering an investment in a solar PV system should be aware of the following:
•Only customers working with active Participating Solar Contractors through sales, design and
installation stages of their project are eligible to receive a residential solar rebate.
•Customers will continue to receive energy bills from Fort Collins Utilities after the solar system is
energized.
•Energy produced by the solar PV system is consumed by the home first; excess energy is returned
to the grid. Utilities does not track ‘solar self-consumption’ in the home.
•There is no ‘banking’ of energy generated by solar PV systems unless battery storage is included in
the system installed. All energy purchased from and returned to the grid is itemized on the
customer’s monthly utility bill with other utility charges which may include potable water, wastewater
and stormwater. Bill credits carry over to future months.
•Customers will be billed for all energy consumed from the grid and credited for energy returned to
the grid according to the rates in place at the time of such consumption and/or generation.
•Solar energy generated by the system will vary on a monthly basis due to natural cycles, with highest
production around the summer solstice and lowest production around the winter solstice.
•The rates and rate structures which govern the price for energy consumed from the grid and energy
returned to the grid are subject to change at the sole discretion of FC Utilities as defined by City
Code. There is no provision for customers to lock in a rate or rate structure.
•The economic performance or payback for the proposed PV system is not guaranteed and may vary
over time based on system performance and energy rates, among other variables. This provision is
waived only if the Participating Solar Contractor providing the system chooses to offer this guarantee
at their own risk. Such representations shall not bind or otherwise create obligations f or Utilities.
•The sizing or design of a system to offset a certain percentage of a customer’s annual energy use
does not mean a reduction of the same size in energy charges or total energy bill.
•Renewable Energy Credits generated by the solar PV system are assigned to Fort Collins Utilities by
customers who accept the Solar Rebate.
•There will be two inspections of the solar PV system: one by Fort Collins Building Services, and a
second by Fort Collins Utilities before issuing the Permit to Operate.
•Limits apply to customer eligibility for payout of accumulated bill credits: Only customers who do not
receive all water services (potable water, wastewater and stormwater) are eligible to receive a refund
of accumulated credits. The customer must have been on a net metering rate for at least 12 billing
cycles as of the payout consideration date, which is March 1 of each year.
•Customers with solar PV systems will not have City-supplied electric power during a distribution grid
outage affecting their service transformer. Customers may install a battery storage system designed
to isolate from the grid during an outage to serve the home’s energy loads.
Customer acknowledges receipt and review of this document:
Customer Signature: _______________________________________________ Date: _____________
ATTACHMENT 2
Sustainable and
Scalable Solar in
Fort Collins –
120% Sizing
Rule and Rates
6-28-22
Fort Collins City Council Work Session
John Phelan, P.E.
Energy Services Manager and
Policy Advisor
ATTACHMENT 3
2Strategic Alignment
Big Move 12: 100%
Renewable Electricity
with 5%local
OCF Approach in practice
Considering the financial equity of current
solar rate structures
4.1 Intensify efforts to meet 2030 climate, energy and 100%
renewable electricity goals that are centered in equity and
improve community resilience
City Strategic Plan
3Summary
Distributed Solar Objectives
1.Scale up solar and distributed energy resource (DER) adoption
WITH
2. Sustainable and equitable funding for customer service, distribution system
operations and infrastructure needs
4Council Questions
1.Does Council support replacing the 120% solar sizing limit in
code with administrative policies that support customer solar
goals and align with Our Climate Future targets?
2.Does Council support maintaining solar credit values and
consideration of eliminating the tier rate component to balance
achieving renewable goals and customer value with limiting
negative equity impacts?
3.What other feedback does Council have regarding local solar?
Solar Background
6Solar in Fort Collins
Residential rooftop
2,770 systems | 17.6 megawatts
Commercial / Institutional
89 systems | 4.3 megawatts
Community Solar
2 systems | 0.7 megawatts
Solar Power Purchase Program (SP3)
16 systems | 4.9 megawatts
7Solar Past and Present
2005 2017 2022
Number of systems 5 892 2,769
To tal capacity (kW)10 4,829 17,676
Avg size (kW)2.2 6.7 6.8
Cost per watt $9.70 $3.67 $4.11
Rebate max $4,000 $1,500 $1,000
Annual installs 5 252 561
Solar credit budget NA $140k $984k
Rate structure Flat Ti ered Ti me-of-Day
Local Solar 2008 to 2021
8Solar Net Metering Rate
Residential Solar
•Meter measures the amount and direction of electricity flow
every 15 minutes.
-If more used than generated, customer buys from grid.
-If less used than generated, customer pushes/exports to grid.
-Each amount has a rate value applied.
-Use multiplied by Ti me-of-Day kilowatt-hour consumption rate.
-Export multiplied by Ti me-of-Day kilowatt-hour credit rate.
•The charges and credits are resolved every month on the
customer bill.
Key Points
•The average solar home self-consumes approximately 50% of the solar
energy they generate (annually).
•Al l self-consumed solar electricity is valued with the full Time-of-Day
consumption rate.
Solar 120% Rule
10What is the 120% Rule?
What is it?The 120% rule limits the size of a solar system to produce no
more than 120% of a customer ’s average annual electric consumption.
Why is it in place?The 120% rule was developed to allow customers to
offset their electric bill with retail net metering rates.
120% Rule Key Points
•The intent was a financial limit and not related to distribution system
requirements.
•The rule is defined in Fort Collins municipal code and was aligned
with state statute until last year.
•The rule is applied only at the time of solar system interconnection
application and is not tracked or calculated for subsequent
homeowners.
•Over 90% of solar applications are already within the sizing limits.
•There is also reference to 120% sizing in the Platte River Power
Supply Agreement that will still apply in limited circumstances.
11Our Climate Future Goals and the 120% Rule
Why Replace the 120%Code Language with
Ad ministrative Policies
•Encourage solar systems that serve
increased use from electrification (e.g.,
electric vehicles, heat pumps)
•Accelerate contribution to reaching
community renewable electricity goals
•Simplify application process for customers,
solar trade allies and staff
Ta rgets
•OCF 2030 target of 5% local solar
•Platte River resource planning
includes 100 to 150 megawatts of
distributed solar by 2030.
Local Solar in 2030
•60-75 megawatts of solar (2.5x)
•5,000-7,000 solar systems
(~20% of single-family homes)
Solar Financials and Policy
Recommendations
13UtilitySolar Financials
Key Question:Ar e solar customers paying their
share of utility operational costs?
•“Old” net metering with full retail value >> cost shift
to non-solar customers
•Fort Collins advanced net metering
•Self-consumed solar has full value
to solar customer
•Net export solar credit is already
marginally lower than consumption rate
Solar Rate Equity
•Exported solar electricity is purchased at near retail
and then sold to other customers at retail.
•The difference between these values does not cover
the portion of Utilities operating costs and represents
additional burden paid for by non-solar customers.
Impact of Solar Rate Deficit
•Ad ds ~40 cents per month on
non-solar residential customers.
•0.5%of residential L&P revenue (2021)
•Without changes, non-solar customer
impact will scale up to ~$1 per
month by 2030.
14Rate Mechanisms for Sustainable and Scalable Solar
Rate Mechanisms
•Maintain the current solar credit rate as retail
rates increase over time
•No reduction in benefit
•Self-consumed benefit continues
to increase
•Ta rget wholesale rate by 2030
•Consider removing the tier component
from the Time-of-Day rate
•Aligns with electrification
•Recalculate solar credit rate
•Annual review of all rate components
(e.g., base charges, solar credit, distribution
facilities and Time-of-Day charges)
$0.000
$0.020
$0.040
$0.060
$0.080
$0.100
$0.120
$0.140
$0.160
2020 2022 2024 2026 2028 2030 2032
Blended Solar Rate Model Illustration
wholesale retail solar credit difference
15Recommendations and Discussion
Recommendations Benefits Key points
Near term (this year)
1 Replace 120% rule in code with
administrative model
Electrification alignment and
streamlined processes
Clear community support
Aligns with Our Climate Future
2 Maintain solar credit rate as the
consumption rate increases
Address equity and reduce
impacts to non-solar
customers
Ta rget solar credit equal to
wholesale by ~2030. Review
annually with rate ordinances.
3 Remove tier component from Time-
of-Day rate structure
Encourages electrification,
recalculated solar credit
Aligns solar, electrification and
rate equity objectives
4 Revise the commercial solar credit
rate logic like residential
Enable more small
commercial solar projects
Current credit rate is outdated
and very low
Longer term
5 Consider new solar business
models with Platte River
Potential new ownership
models
May require revisions to Power
Supply Agreement
16Summary
Distributed Solar Objectives
1.Scale up solar and distributed energy resource (DER) adoption
WITH
2. Sustainable and equitable funding for customer service, distribution system
operations and infrastructure needs
17Council Questions
1.Does Council support replacing the 120% solar sizing limit in
code with administrative policies that support customer solar
goals and align with Our Climate Future targets?
2.Does Council support maintaining solar credit values and
consideration of eliminating the tier rate component to balance
achieving renewable goals and customer value with limiting
negative equity impacts?
3.What other feedback does Council have regarding local solar?
QUESTIONS?
For Questions or Comments, Please Contact:
John Phelan
jphelan@fcgov.com
20Additional Information
Additional Information
21Solar Sizing References
•Fort Collins Solar 120% Rule Code -Section 26-464 p1a
•The qualifying facility is sized to supply no more than one hundred twenty (120)
percent of the customer-generator's average annual electricity consumption at that
site, including all contiguous property owned or leased by the customer-generator,
without regard to interruptions in contiguity caused by easements, public
thoroughfares, transportation rights-of-way or utility rights-of-way;
•Platte River Power Supply Agreement
•Fort Collins shall not be in violation of the all requirements purchase obligation herein
when it purchases power from net metered customers, provided that for customers
who have entered into agreements with entities that own and operate solar generation
located on the customer ’s property size the solar generation to supply no more than
one hundred and twenty percent (120%) of the annual average consumption of
electricity by the customer at that site.
•Colorado SF21-261 Reference
•System “shall be sized to supply no more than 200% of reasonably expected average
annual total consumption”
22Residential Solar Financial Calculation
Rate components
•Solar credit
•Off peak
•On peak
•Retail consumption rate
•Off peak
•On peak
Impact of distribution facilities charge deficit
•0.2%of total L&P revenue (2021)
•Ad ds ~40 cents per month on non-solar residential
customers
•Without changes, non-solar customer impact will
scale up to ~$1 per month by 2030
Solar net export and use
•Kilowatt-hours exported
•Off peak
•On peak
•Kilowatt-hours sold (same)
•Off peak
•On peak
Results
1.To tal net export solar credits
2.Net export solar retail revenue
3.Net revenue (#1 minus #2)
4.To tal distribution facilities charge
5.Distribution facilities charge
deficit (#4 minus #3)
X =
23Residential Solar Financial Details
Financial details -2021
1.To tal net export solar credits -$868k
2.Net export solar retail revenue -$912k
3.Net revenue -$44k (#1 minus #2)
4.Distribution facilities component -$342k
5.Distribution facilities component deficit -
$297k (#4 minus #3)
Rate details -2021
•Solar credit
•Off peak, 6.3 cents
•On peak, 24 cents
•Retail consumption rate (w/o PILOT)
•Off peak, 6.75 cents
•On peak, 24 cents
Impact of $300k deficit
•0.2%of total L&P revenue
•Adds ~40 cents per month on
non-solar residential
customers
•Without changes, non-solar
customer impact will scale up
to ~$1 per month
24
Program Portfolio Results
Local Renewable Capacity
Operational Capacity kW
2010 2015 2020 2021
Local Renewables 740 7,451 19,456 24,698
Commercial Solar 542 1,078 2,500 3,730
Residential Solar 199 2,093 11 ,677 15,478
Community Solar 0 621 621 621
SP3 0 3,660 4,659 4,869
Local Renewable Capacity
kW
*
25Solar Metering and Rates: Residential
26Solar Metering and Rates: Non-Residential
•Commercial –similar net billing structure with very low (old)
value for export value
•Riverside Community Solar –system production is valued at
project-specific TOD rates and apportioned to customers
based on their ownership percentage
•SP3 –Each system has a power purchase agreement and
the electricity is allocated partially to Green Energy program
subscribers and partially to all customers
27Residential Solar Fact Sheet
Sample/excerpt
28Residential Solar CSU Study
120 Percent Rule Analysis Results
Solar export to grid
analysis