Incumbent utilities, by and large, are not enamored by the prospects of more solar PVs going on their customers’ roofs. They see self-generation and energy efficiency as competition. Both reduce revenues and are counter-intuitive to their long-held view of the business they are in – which they define as investing in more infrastructure, generating and selling more kWhrs and earning more for their shareholders.
A new study by the Pecan Street Research Institute suggests that utilities’ aversion to solar PVs may be unfounded, certainly overblown. It concludes that residential solar PVs can cut demand during peak summer hours by 58%, when it is expensive to serve. Based on data from 50 single family homes in Pecan Street’s demonstration project in Austin, TX, the study found that west-facing panels produced 49% more electricity during summer peak demand hours than south-facing panels. Moreover, the study found that west-facing systems cut peak demand 65% compared to 54% for south-facing systems.
Though west-facing systems may be better at cutting summer peak demand and add more value to the grid in certain regions, south-facing systems offer an advantage in total annual energy production – the former is better for the utility by substituting for expensive peaking generation, the latter for the customer by reducing electricity bills.
The study says that during peak hours, typical homes used 80% of the generated power on-site, feeding roughly 20% to the grid. Over the course of a typical day, 64% of the generated power was used in the home.
According to Pecan Street CEO Brewster McCracken, “These findings suggest that rooftop solar systems can produce large summer peak reductions that benefit utilities and customers alike without requiring customers to change their behavior or sacrifice comfort.”
The study concludes that utilities have a lot to gain from rooftop solar, which isn’t the prevailing sentiment coming from the industry. As reported in the Dec 2013 issue of this newsletter, Arizona Public Service Company (APS), the largest investor-owned utility in Arizona, spent roughly $4 million on anti- solar advertising during its campaign to change the state’s net energy metering (NEM) policy.
As everyone knows, serving the peak energy demand in the summer is extremely high and unprofitable – unless the customers are on time-of-use tariffs. By cutting summer peak demand more than 50%, solar PVs offer benefits to both utilities and customers. The industry would be better off attacking the real enemy – heavy air condition users – rather than customers with solar PVs.
Perry Sioshansi is a specialist in electricity sector restructuring, and he has been actively involved in discussions in a number of developed, developing and transition economies. He is founder and president of Menlo Energy Economics is the editor and publisher of EEnergy Informer. He may be reached at [email protected].
