HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/08/2018 - LOCAL SOLAR GOALS, POLICIES AND BUSINESS MODELSDATE:
STAFF:
May 8, 2018
John Phelan, Energy Services Manager
WORK SESSION ITEM
City Council
SUBJECT FOR DISCUSSION
Local Solar Goals, Policies and Business Models.
EXECUTIVE SUMMARY
The purpose of this work session is to provide an update on the adoption of local solar generation, to present
information regarding the opportunities and challenges on increasing levels of local solar and to seek feedback
from Council on the development of future goals and policies.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Staff is seeking general feedback on the topic of local solar and distributed generation, in addition to the following
specific question:
1. Does Council support the development of a distributed energy resources roadmap in conjunction with an
update to the Energy Policy?
BACKGROUND / DISCUSSION
General Topic
The purpose of this work session is to provide an update on the adoption of local solar generation, to present
information regarding the opportunities and challenges on increasing levels of local solar and to seek feedback
from Council on the development of future goals and policies. While the discussion herein is focused on solar
photovoltaic systems installed within Fort Collins Utilities service area, similar concepts and issues apply to
distributed energy resources technologies in general (solar, batteries, demand response, etc.). For the purposes
of this work session, the terms local solar and distributed energy resources can be considered interchangeable.
Solar Adoption Trends
Fort Collins has seen rapid growth in the installed capacity of local solar. Through April 2018, there are over 1,100
operational systems with a total capacity of 11.1 megawatts; generating over 1% of the community’s electricity,
enough to serve over 2,000 typical Fort Collins homes. The rate of installations has also increased, with over one
fourth of the current systems installed in the last twelve months.
Fort Collins Energy Policy, adopted in 2015, includes a renewable electricity target of 20% by 2020, with 2%
coming from resources installed on the distribution system (local). In 2017, the community reached 16% overall
renewable electricity, with 1% from local solar. To reach the 2020 Energy Policy target, approximately 10
megawatts of additional solar needs to be installed from 2018 through 2020. This will effectively double the
amount of solar in Fort Collins compared to today’s levels. Looking forward to 2030, a reasonable forecast of
solar adoption results in 50 megawatts or more of local solar capacity.
Benefits of Local Solar
Fort Collins has supported local solar through programs, net metering, interconnection standards and rebates
which have encouraged innovators and early adopters to invest in solar. These tools and resources demonstrate
the values expressed by City leadership and Utilities. The benefits of local solar include (Attachment 1):
May 8, 2018 Page 2
• Energy and peak demand reductions. Similar to energy efficiency, solar reduces the community’s
electricity loads, which in turn reduce future requirements for investment in new supply resources.
• Customer satisfaction. Customers expect Utilities to provide programs and services for both efficiency
and renewable energy. Utilities customer satisfaction surveys consistently show strong support for
programs (Attachment 2).
• Leveraged investment and local economy. The capital requirements for installing solar, while declining,
remain substantial. In 2017, the residential rebates were leveraged at an over 9:1 ratio. This investment
and related services support employment and secondary local economic benefits.
• System benefits. Local solar has the potential to provide distribution system benefits, especially when
paired with pending storage technologies. It’s also important to note that there is the potential for
additional distribution system investment required by localized high saturation of solar.
• Resiliency. Similarly, local solar has the potential to provide resiliency benefits when paired with pending
storage technologies.
• Air quality. Solar is a zero emissions resource, supporting continued efforts to reduce local air pollution.
• Climate and Energy Policy objectives. Local solar targets are included in the Energy Policy, and each
solar kilowatt-hour comes with associated carbon emissions reductions.
Challenges of Local Solar
As local solar grows over time, it also presents a number challenges to Fort Collins Utilities ability to serve all
customers in an equitable fashion. The very strategies and tactics which support the growing adoption of solar
may, in the future, present risks to the viability of the distribution grid as a community asset. The grid is the asset
which makes it possible to accommodate local solar, while also providing the vital daily services we depend upon
from the use of electricity. It is essential to note that Fort Collins electric systems are not at risk with the current
low levels of solar penetration. It is the purpose of this work session to identify this future risk and suggest the
development of plans to create a sustainable business model to continue the growth of solar.
Opportunities for Sustainable Solar
There are several key reasons why Fort Collins is very well positioned to address the future challenges of
additional solar. These include:
• Advanced metering infrastructure. The AMI meters deployed in Fort Collins measure and record the net
electricity consumption or net electricity export every 15 minutes. This provides an elegant metering
solution for solar, with solar energy consumed within the home reducing bills by the retail rate, while net
export energy is metered and credited as a separate item on the bill.
• Time of Day rates. The TOD rate structure going into effect in October 2018 also provides the foundation
for future solar value pricing. The adopted rates vary by time of day, season of the year, and for
consumption and export.
• Tools and timing to adjust. Fort Collins current low penetration (< 3.0% of residential customers) and
energy production (just over 1% of electricity) means that there is time to adjust in a gradual and
predictable path towards a more sustainable business model.
Solar Business Models
Solar systems and associated programs have many different structures and characteristics, resulting in many
possibilities for both customers and utilities. Fort Collins current solar programs are described in Attachment 3.
May 8, 2018 Page 3
However, the most basic solar model differentiation is defined by the location of the solar system relative to the
electric meter. These two approaches and basic characteristics are described below:
• Behind the meter. Behind the meter systems are the most common structure and is also known as “net
metering” or “net energy metering”. Behind the meter systems incorporate the solar generation value into
the electric bill of the host building. Approximately 70% of the current solar capacity in Fort Collins is
behind the meter.
Historically, this approach utilized traditional mechanical electric meters, creating the terminology of solar
systems making the meter “spin backwards.” Without advanced meters, this approach generally creates a
bank of credits in the summer which are carried forward to be used in winter months.
As noted above, Fort Collins advanced meters measure and record the net electricity consumption or net
electricity export every 15 minutes. The balance of charges and credits which result are resolved for the
customer on a monthly basis.
• In front of the meter. In front of the meter systems connect the output of the solar system through a
separate meter directly to the distribution system. This approach is also known as a feed-in tariff, and in
Fort Collins as the Solar Power Purchase Program (SP3). While more common in Europe and Asia, there
are few examples in the United States of a feed-in tariff. Approximately 30% of the current solar capacity
in Fort Collins is in front of the meter.
This approach provides a financial payment via a power purchase agreement for generated electricity,
while the host building’s electric usage and associated bill is not affected. Electricity generated from this
approach serves all customers and becomes part of the resource mix for the community. The SP3
program is described in more detail in Attachment 3, and is currently only offered at commercial scale in
Fort Collins.
There are many factors which influence the details of how these two fundamental solar models are implemented.
These include legislative, regulatory and legal as well as utility specific programmatic and rate differences. A
representative list of these factors includes:
• Up front cost
• Source of capital
• Utility ownership
• Scale and location
• Customer segment and rate structure
• Rebates
• Procurement options
• Self-consumption credits
• Export production payments
• Avoided wholesale costs
• All requirements agreements
• Buy-sell agreements
• Value of solar electricity
• Roof lease payments
• Solar operations and maintenance
• Net metering definitions
• Base rate charges
• Solar standby charges
• Sizing requirements
• Tax credits
• Power purchase agreements
• Renewable energy credit accounting
• Carbon accounting
May 8, 2018 Page 4
Utility Owned Rooftop Solar Program Examples
There are a few utility-owned rooftop (aka distributed) solar programs which provide examples. The most well-
known are two pilot programs in Arizona. These and two other examples are summarized below:
• Solar Partner Program from Arizona Public Service (APS). APS operated a pilot program offering
customers a $30 per month rooftop “lease” payment in exchange for the utility installing solar panels on
the home. The electricity generated from the system was “in front of the meter” and did not change the
customer’s bill. APS used a bulk purchase approach with local solar vendors to contract for the
installation and subsequent maintenance. The program installed 1,670 systems as a research and
demonstration pilot focused on utility control of smart inverters. While APS has published a number of
reports on the lessons learned from the project, the program is closed to new installations.
• Tucson Electric Power (TEP) Residential Solar Program. The TEP-Owned Rooftop Solar program was
approved as a pilot by the Arizona Corporation Commission in December 2014. The program has a $10
million budget to install an estimated 600 rooftop systems, each with an average capacity of about 6
kilowatts. The program is full subscribed and is now closed. Customers would pay $250 to sign up and
agree to a flat charge of $16.50 per kilowatt, fixed for 25 years. This creates a flat bill for customers for
this time period.
• Alectra PowerHouse Pilot. Alectra is the second largest municipally owned utility in North America,
serving over 1 million customers in Ontario, Canada. The PowerHouse pilot will install utility owned solar,
batteries and energy management systems in 20 homes. The results of the pilot may lead to additional
scaling and investment.
• Georgetown Utilities Virtual Power Plant. Georgetown, Texas is participating in the Bloomberg Mayors
Challenge as a Champion City. Their proposed idea is to develop a virtual power plant serving their
community with solar systems and battery storage. The project is currently under feasibility studies as
part of the Bloomberg competition.
Solar Financial Analysis
With the many variables noted above, the best way to illustrate the financial impacts of local solar is through a
simplified example for the two basic structures.
Behind the meter:
• Non-solar customer. For a non-solar residential customer in Fort Collins, Utilities purchases a kilowatt-
hour (kWh) from Platte River Power Authority for 6 cents and sells that kWh to the customer for 9 cents.
The net impact of this transaction is 3 cents of revenue, which funds the distribution system and
associated services of Utilities.
• Behind the meter solar customer. When a customer makes the investment to install solar on their home,
Utilities purchases (or provides a credit) for the solar kilowatt-hour (kWh) for 9 cents and sells that kWh to
the same or different customer for 9 cents. The net impact of this transaction is zero revenue.
• The net effect of this transition to solar is known as lost revenue, and in Fort Collins case is approximately
3 cents per kWh. The analysis is different for commercial customers, due to differences in the rate
structures.
• At current levels of net metered solar, this lost revenue is over $300,000 annually, representing 0.25% of
total electricity revenue and approximately 0.8% of the revenue for the Light & Power utility operations
and services.
May 8, 2018 Page 5
• The funding requirements for the distribution system come from the remaining ratepayers over time,
creating a disconnect whereby solar customers are not contributing an equitable share to the ongoing
requirements to maintain the grid.
• Based on typical solar system production and home consumption, the installation of behind the meter
solar in 2018 (2 megawatts) will add approximately $60,000 to the annual budget for purchased energy
from net exports in future years.
In front of the meter:
• Host customer. Commercial customers who are hosting an in front of the meter solar system pay the
same electricity bill, based on their usage, load profile and rate structure. In some cases the host
customer is also the solar developer.
• Solar PPA. Utilities contracts with the solar developer for a pay for performance PPA at an agreed upon
price. Agreements in progress this year are approximately 12 cents per kWh, fixed for 20 years for
systems larger than 100 kilowatts.
• The net effect of this higher cost resource is a small increase in the overall retail cost of electricity to all
customers. Under current agreements for the SP3 program, this equates to approximately 1% of the
electric price, or rate, for the output from 4.5 megawatts of local solar.
Another factor with regards to local solar is Fort Collins contractual relationship with Platte River Power Authority
(of which Fort Collins is also one of four member-owner communities). The All Requirements Agreement between
Fort Collins and Platte River does not restrict customer-owned behind the meter generation. The same agreement
does limit Fort Collins from owning more than one percent of peak generation (currently equivalent to
approximately three megawatts). While this could be a limiting factor in deployment of expanded in-front of the
meter options, Fort Collins and Platte River have a Solar Memorandum of Understanding which accommodates
the SP3 program while also meeting the All Requirements agreement.
Table 1 summarizes specific metrics for four representative business models with assumptions of current costs,
rate structures and policies. For each business model, the table also notes the tactics available to Utilities to
change or influence the financial outcomes.
• Behind the meter residential. This example is for typical home solar, representative of approximately 50%
of the solar capacity in Fort Collins.
• Behind the meter commercial. This example is for typical commercial solar, representative of
approximately 15% of the solar capacity in Fort Collins. The primary difference is the rate structures for
commercial customers and the characteristic that the solar electricity is consumed within the host
building.
• In front of the meter SP3. This example is for 2018 proposed SP3 projects.
• In front of the meter utility owned rooftop. This example is not currently offered in Fort Collins. It is similar
in approach to the SP3, with the procurement, installation and ownership being under Utilities. There are
several utilities in North America who have pilot or demonstration programs with this model (attachment
4). This model also has the potential to be directed at traditionally “hard to reach” segments in the
community.
For the behind the meter and SP3 cases, adjustments in a range of tactics can result in the solar systems being
neutral or better from the utilities (and other ratepayers) perspectives. The next section discusses
recommendations for developing a predictable path forward to create a sustainable solar financial model.
May 8, 2018 Page 6
Table 1: Comparison of Four Representative Solar Business Models
Description Behind the
Meter
Residential
Behind the
Meter
Commercial
In Front of
Meter SP3
In Front of
Meter Utility
Owned Rooftop
Current average cost ($ per watt) $3.50 $2.50 $2.50 $2.75
Capital source (Private:Utility) 90:10 80:20 100:0 0:100
Lifetime utility value (NPV cents
per kWh)
-$0.05 -$0.03 -$0.02 -$0.06
Tactics available to change •Rebate
•Export
pricing
•Fixed
charges
•Rebate
•Rate
structure
•PPA price •Bulk purchase
•Capital
availability
•Program costs
•O&M costs
Recommendations
Fort Collins customers’ increasing adoption of solar energy systems provides long-term opportunities and
challenges for Utilities, for all customers and for the community’s climate and energy goals. Due to the early
phase of Fort Collins location on a typical adoption curve, the current program structures are not financially
sustainable if continued indefinitely. It is reasonable to expect an increase of approximately five times the solar
capacity by 2030.
The timing is excellent for a planning process to create a predictable path for local solar, and distributed energy
resources, out to 2030 and beyond. Between now and 2020, updates to three key policy and planning initiatives
will be underway; these initiatives are the Fort Collins Energy Policy, the Climate Action Plan Framework and
Platte River Power Authority’s Integrated Resource Plan. There will not be a single approach which achieves the
desired outcomes, instead what will be necessary is an optimized mix of strategies, tactics and business models
to achieve community goals and customer expectations
Staff recommends that a distributed energy resources roadmap project be initiated, in coordination with the
Energy Board and community stakeholders. The Energy Board’s 2018 work plan includes:
• Light & Power’s finances are being challenged by its transition to a more distributed and renewable smart
grid as well as by using electricity revenues to administer energy conservation measures that reduce
electricity revenues or that affect the consumption of energy other than electricity. The Energy Board will
study and make recommendations for the development of a sustainable business plan for Light &
Power.
The scope of the initiative would be to review the goals, targets, rates, pricing, policies and business models for
solar and distributed energy resources. The objectives for the effort would be to establish, a sustainable financial
model for distributed energy resources and a predictable path and timeline for customers and trade allies which
recognizes the value of both the distribution grid system and individual assets to create Fort Collins energy future.
Next Steps
Pending Council feedback, staff will coordinate a work plan and schedule for the development of a distributed
energy resources roadmap with the Energy Board and community stakeholders. The work plan will maintain
alignment with proposed updates to the Energy Policy, Climate Action Plan Framework and Platte River
Integrated Resources Plan.
May 8, 2018 Page 7
ATTACHMENTS
1. Local Solar Benefits (PDF)
2. 2017 Customer Satisfaction Survey (PDF)
3. Fort Collins Solar Programs (PDF)
4. Powerpoint Presentation (PDF)
ATTACHMENT – Local Solar Benefits
ATTACHMENT 1
ATTACHMENT – 2017 Customer Satisfaction Survey Results
ATTACHMENT 2
2
Attachment 2
1
ATTACHMENT – Fort Collins Solar Programs
Solar Rebates Program -Residential
April 2018
Program Manager – Leland Keller
Program Coordinator – Todd Musci
Description The Solar Rebates Program provides incentives to install net metered electrical generation
capability on residential properties. The program began offering rebates to home owners in 2008
and has grown to become a year-round dependable program supporting a stable market for solar
systems in the city. Rebate amounts have been reduced over time to the current incentive of $0.50
per watt, with a rebate limit of up to $1500 for residential customers. Solar systems are also limited
by design to produce no more than 120% of the customer’s annual load.
Results and
Analysis Program Calendar Year Participants
New Installed Capacity
kW (DC)
Incentives Paid
2018 YTD 90 584.1 $144,738
Annual Target 327 1,959 $490,000
Percent of Year 38% 30% 30%
Results Percent 28% 30% 30%
Analysis: Residential solar rebates were funded for the entire calendar year in 2017, lending
stability and confidence to vendors for their business development work in the community. In
2017, we finished the program year with $65,954 (13.5%) of program year rebate monies
uncommitted. The $424,046 of 2017 PY funding committed represents 287 projects; of this,
$133,500 was carried forward in purchase orders for projects underway. The $419,086 paid in 2017
included $143,337 from budget years 2015 – 2016.
Targets • 327 participating projects at $1,500 each for a total of 1,959 kW
• Marketing research being conducted to identify existing program demographic markers
• We anticipate conducting an evaluation in 2018 on program process and satisfaction
Dependencies
and Risks
• The solar programs will experience the effects of the 30% import tariff ordered in January
2018; the impact is likely to be downward pressure on the number of projects and upward
pressure on system pricing.
• Implementation of the TOU rate change in October will favor solar customers with west-
facing panels and negatively impact solar customers with east-facing panels. Staff is
conducting research to identify the influence the TOU rate presents to solar customer bills,
customer satisfaction, and trends in program enrollment.
• The challenge for 2018 will be to balance marketing and other market stimulation to avoid
exhausting the rebate budget before the end of the program year. If program demand
exceeds the rebate budget, solar contractors may lose confidence in program stability.
Partners and
Related
Programs
• Market awareness efforts to draw participants into the Distributed Battery Storage Pilot
may drive more awareness of solar rebates and solar participation in 2018.
• Consideration of developing and launching criteria for “Participating Contractors” in 2018
to enhance consumer protection and quality of work, similar to Efficiency Works.
More info • Residential sector in 2017 accounted for 90.7% of the solar portfolio capacity additions.
0
500
1000
1500
2000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Solar Rebate - kW
ATTACHMENT 3
2
Community Solar Program
April 2018
Program Manager – Leland Keller
Program Coordinator – Todd Musci
Description The Riverside Community Solar Project is a 621 kWdc solar generation facility located in Fort
Collins on repurposed brownfield land on Riverside Drive, built and operated by Clean Energy
Collective (CEC). Customers are provided a virtual net-metered credit on their utility bill for
electricity output (fluctuates monthly) derived from their share of the project. Community Solar
makes solar generation possible to customers regardless of their dwelling type or ownership
status. It is now fully subscribed with a wait list. Approximately two hundred five residents
collectively own all the shares in the Riverside Project.
Results and
Analysis
Program Calendar Year Participants
Total Installed
Capacity
kW (DC)
New Installed Capacity
kW (DC)
Incentives
Paid
2018 YTD 208 621 0 $0
Annual Target 200 621 0 $0
Percent of Year 30% 30% 30% 30%
Results Percent 103% 100% 100% 100%
Analysis: The Community Solar program is seeking development of a new project in collaboration
with Platte River and the other member cities to support the expansion of this program to serve
interested customers. A proposed project at Rawhide was abandoned in 2017 due to concerns
about price and schedule uncertainty related to pending import tariffs. Staff is currently rescoping
the program structure related to a redesign of the Green Energy Program.
Targets • The system was forecast to generate more than 931 MWh annually. First quarter
production was 213.7 MWh. The system operator is investigating differences due to
snow load, weather variations and panel soiling.
• Community Solar was planned as one element in meeting the Energy Policy local
generation target (2% by 2020).
• Utilities is working with PRPA to pursue expansion of solar and wind generation
capacity through power purchase agreements. The new resource would likely be
delivered to customers through the Renewable Energy Choice program.
Partners &
Programs
Clean Energy Collective: CEC owns, operates and maintains the solar system, provides
customer service functions to subscribers and calculates monthly bill credits provided to Utilities
to credit customer bills. We anticipate a transition to TOD-based credits for generation to CEC
customers.
Platte River: This system falls under an MOU between Utilities and Platte River whereby the
monthly generation of the solar system is accounted for under Tariff 1 and Platte River then
credits Utilities for the value of solar.
More info • https://www.fcgov.com/utilities/residential/renewables/fort-collins-community-solar
• https://fcu.rooflesssolar.com/
0
100
200
300
400
500
600
700
2005
2006
3
Solar Power Purchase
Program
2018 Program Plan and
Report
Program Manager-
Rhonda Gatzke
Program Coordinator-
Todd Musci
Description The Solar Power Purchase Program uses a feed-in-tariff model with power purchase agreements to
increase solar generation on the distribution grid. The initial systems are compensated at
contracted rates set by Utility at $0.15/kWHr for systems greater than 100kW and $0.18/kWHr for
systems less than 100kW. In both cases, the term of the PPA is 20 yrs. Projects were constructed
beginning in 2013 with the first system operating in January 2014 and the last project completion in
Dec 2015. These projects were eligible for a 3x multiplier with regards to the Colorado Renewable
Energy Standard.
Results and
Analysis
Program
# of
Projects MW
Capacity
Net Generation
MWh
FIT Annual
Spend
$
YTD new additions 0
0 MW 0 0
Bi-Annual Target new additions ~4
~2MW 3,000 ~$282,000
Percent of Year 5
0% 0 0
Results Percent 0%
0% 0 0
2017 14
3.7 4,878 $752,724
Analysis: 2014 and 2015 SP3 projects continue to perform on target. 2017+2018 BFO Cycle granted
$282,000 Annual FIT allowance for 20 yrs; no new projects are constructed to date and thus we are
dramatically missing our target objective.
Targets • Annual Target Descriptors/Numbers: Funding is available in 2017 and 2018 to expand the
SP3 with another phase, predicted to add ~2MW of additional solar capacity. Competitive
program design includes reverse bid price per KWH solar generation. Program application
period opened in June 2017 and closed September 2017 with anticipated project
construction period Nov 2017-Nov 2018. Results provided ~819 KW projects (4 total) w/wt
avg ~11.4 ¢/kWH and~50% funds committed. Extended application period through Feb
15th is targeting another ~4 projects funded by remaining ~50% remaining funds
• Ongoing operations: Remaining ~ 18 yr of 20 yr PPA existing 14 projects are producing as
expected (~5GWH/yr) at FIT annual cost ~$750K.
• Planned Changes to Program Structure: 2019/2020 BFO cycle may include SP3
• Purchasing Requirements: None foreseen beyond execution of PPAs
• Marketing Segment: Greater marketing to C&I customers needed, along with Solar
Developer strategic partnership development so we can jointly reduce the soft costs
associated with customer acquisition
4
• Reporting Metrics and Frequency: Monthly SP3 generation accounting is being conducted
and reported to PRPA for ‘Buy-Sell’ reconciliation
• Plan for Evaluation: Under development
Dependencies
and Risks
• International Trade Commission Sec 201 case has stalled most projects through Q3&Q4
2017 and Q1 2018 to-date. With module cost increase impacts unknown to financiers
there have been holds placed on 3 existing projects under contract (~760 KW Pavilion
Shopping Mall) with Namaste and Unico Solar Investors. Continued debate on tariff impact
may lengthen stall into 2018.
Partners and
Related
Programs
• Solar Developers Namaste, Community Energy, Sandbox Solar, and other local integrators
(potentially Solar City, Custom Solar, Atmosphere Conservancy) are integral to SP3 project
development. These are the same partners needed for C&I rebated (net-metered) project
development.
More info • Local solar installations total ~10 MW to date; SP3 constitutes ~ 40% of that total capacity
• Link: \\UFP\Utilities\CCSU\Energy-Services\Programs\Renewables\Solar Power Purchase
Program\SP3 TRACKING\PRPA Tracking\2018 PRPA Generation Tracking.xlsx
5
C&I Solar Rebate Program
2018 Program Plan and Report
Program Manager-Rhonda Gatzke
Program Coordinator-Todd Musci
Description The C&I Solar Rebates Program provides incentives to install net metered electrical generation
capability on Commercial and Industrial properties. The program began offering rebates to
businesses in 2010. Rebate amounts have been reduced to $0.50 per watt, with each project size
limit increased to 200 kW for commercial installations. Premises with solar are billed under their
normal rate structure, with advanced meters registering net consumption and net production on a
15 minute basis and monthly net production credited at a fixed rate, depending on GS rate class.
Results &
Analysis
Program
# of
Projects
MW Capacity MWh
Annual Rebate
Spend
$
YTD 0 0
0 0
Bi-Annual Target ~5 2
3000 $500,000
Percent of Year 5% 0%
0 0
Results Percent 0% 0%
0 0
2017 1 0.1
150 $46,170
Analysis: 2017+2018 BFO Cycle granted $500,000 Annual C&I Rebate allowance; only one new
project has been constructed to date and thus we are dramatically missing our target objective.
Targets • Target is to add 1MW net metered C&I generation per yr in 2017&2018 with up to
$100,000/system (targeting 5 large systems per year).
• Ongoing operations: An annual average of 5 C&I systems (35 total since 2010) have been
rebated; avg system size ~ 21KW. Total capacity of incented C&I net-metered
systems~748 kW through 2017.
• Planned changes to program structure or delivery: Removing any policy barriers to the
adoption of net-metered Commercial PV projects warrants working with Legal to clarify
Utility integration with 3rd party owned systems
• Purchasing requirements: None
• Marketing/target customer segments: Greater marketing to C&I customers is needed,
along with Solar Developer strategic partnership development so we can jointly reduce the
soft costs associated with customer acquisition
• Reporting metrics and frequency: Quarterly via Plan Book
• Plan for next evaluation – under development
Dependencies
and Risks
• Adoption is dependent upon financials that are largely limited by C&I net metering rate
design which values energy at ~50% of bill total. Demand charges comprise ~50% for which
PV doesn’t significantly abate. Additional risk to program is the continued uncertainty
surrounding module import tariff (ITC Sec 201).
Partners and
Related
Programs
• Solar Developers Namaste, Community Energy, Sandbox Solar, and other local integrators
(potentially Solar City, Custom Solar, Atmosphere Conservancy) are integral to C&I solar
rebate/net-metered project development. These are the same partners needed for SP3
project development.
6
More info • Where to look for more info:
https://www.fcgov.com/utilities/residential/renewables/solar-rebates
• Percent of portfolio: C&I total capacity ~750 KW equates to ~8% of total ~10MW local PV.
7
1
Local Solar Goals, Policies and Business Models
John Phelan, Energy Services Manager
May 8, 2018
ATTACHMENT 4
Questions for City Council
• Does Council support the
development of a distributed
energy resources roadmap in
conjunction with an update to the
Energy Policy?
2
Solar Adoption
Good News
• Community is adopting solar
• Supports CAP and Energy
Policy targets
• Leveraging private capital
• Local jobs
3
Takeaway: solar adoption is
significant and accelerating
Renewable Targets
Energy Policy
• 20% by 2020
• 2% local by 2020
2017 update
• 16% overall renewable
electricity
• 1% from local solar
4
Takeaway: we are approaching
established target milestones
Benefits of Local Solar
• Demand reduction
• Customer service
• Leveraged investment
• System benefits
5
Would you be willing to
purchase renewable energy
for an additional cost?
Takeaway: local solar has
multiple benefits
• Climate and Energy
Policy objectives
Solar Adoption
Challenges
• Sustainable financial model
• Grid as a community asset
6
Takeaway: local solar also
presents long-term risks
Solar Adoption
Opportunities
• Advanced metering
infrastructure
• Time-of-Day pricing
• Tools and timing
to adjust
7
Takeaway: the time is right to review local solar strategies
Distributed Solar Business Models
“Behind the meter”
(aka net metering)
8
70% of solar 30% of solar
“In front of the meter”
(aka feed-in tariff)
Behind the Meter Solar
-3 ¢
for
FC
grid
10,500,000
kilowatt-hr
-3 ¢ -$315,000
9
+3 ¢
-6 ¢
+9 ¢
Non-solar customer
0 ¢
-9 ¢
+9 ¢
Solar customer $128M
-$0.3M
$37M
Takeaway: current local solar model creates a deficit
Solar Financial Elements
Behind the Meter
Residential
Behind the Meter
Commercial
In Front of Meter SP3 In Front of Meter Utility
Owned
• Base cost
• Rebate
• Retail price
• Export price
• Avoided wholesale price
• Base cost
• Rebate
• Retail price
• Export price
• Avoided wholesale
price
• Demand rate structures
• Base cost
• PPA payment
• Platte River buy-sell
• Value of solar
• Retail rates
• Base cost
• PPA payment
• Platte River buy-sell
• Value of solar
• Retail rates
• Roof lease payment
• O&M costs
10
Takeaway: behind the meter and in front of the meter
approaches have different financial structures
Solar Business Models
Description Behind the Meter
Residential
Behind the Meter
Commercial
In Front of Meter
SP3
In Front of Meter
Utility Owned
Current average cost
($ per watt)
$3.50 $2.50 $2.50 $2.75
Capital source
(Private: Utility)
90:10 80:20 100:0 0:100
Lifetime utility cost
(NPV cents per kWh)
-$0.05 -$0.03 -$0.02 -$0.06
Tactics available to
change
Rebate
Export pricing
Fixed charges
Rebate
Rate structure
PPA price Bulk purchase
Capital availability
Program costs
O&M costs
11
Takeaway: an optimized mix of business models will be
necessary to achieve goals and customer expectations
Recommendations
Review solar and distributed
energy resource
• Goals and targets
• Rates and pricing
• Business models
Objective:
Develop distributed solar
roadmap to 2030
12
Questions for City Council
• Does Council support the
development of a distributed
energy resources roadmap in
conjunction with an update to
the Energy Policy?
13
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Community Solar - kW