The Massachusetts Institute of Technology (MIT), long a skeptic of distributed-solar assets’ usefulness, issued a report that suggests large-scale, utility-controlled solar assets may make better economic sense in the long-run.
A 384-page report, Utility of the Future details what the utility of the future might look like, including the challenges of integrating distributed solar into its portfolio.
It warns regulators that they must “minimize distortions from charges that are designed to collect taxes, recover the costs of public policies [including subsidies for renewable energy [and] cross-subsidies between different categories of customers, etc.), and recover residual network costs (i.e., those network costs that are not recovered via cost-reflective charges).”
The recommendation parrots an oft-used (but equally often disproven) argument that utilities make that distributed-generation (DG) solar users shift the burdens of utility-generated electricity-system upkeep to non-solar customers, a claim that at least 16 state-level studies have found to be mythical.
MIT’s experts also single out DG PV as resources that may cost more than its benefits are worth. The report’s authors write:
“Economies of scale still matter, even for distributed energy resources. For resources that can be deployed at multiple scales, such as solar PV and battery energy storage, incremental costs associated with failing to exhaust economies of unit scale can outweigh locational value.
This can result in a “distributed opportunity cost,” making distributed deployment of these resources inefficient. Trade-offs between the incremental costs and additional locational value associated with deploying distributed resources on a smaller scale must be considered in each context.
For resources that exhibit significantly higher unit costs at smaller scales, such as solar PV and battery energy storage, distributed deployment is likely to be inefficient in many locations.”
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Well, in some ways this is correct, as putting a PV array on my roof and a battery in my house is not the most efficient use of resources. By putting those resources behind the meter, I no longer pay for the power generation or transmission facilities that have been built, and my utility bill is lower. This is not the most advantageous use of resources, but for me it makes economic sense due to the rate tariff I am under. Unfortunately, the utilities and the regulators thought that I was a ‘captive’ customer that could be called upon to pay whatever they desired for the remainder of time. This will not be the case.
Now, Rocky Mountain Institute has noted that this situation is correctly represented, and that regulatory and tariff changes need to be made or many people will follow this example. http://www.rmi.org/electricity_load_defection
Well, I think that you need to keep in mind the source. I’ve interacted with several of the people whose names appear on this report, and it’s exactly what I would expect from MIT – biased against rooftop solar and likely under-counting the benefits of DG.
Just because fossil and nuke-funded MIT weighed in does not mean this is the end of the debate around these matters. The world’s finest technical university can be stunningly out of date and out of touch on energy matters – because they are paid to be.
There’s no question that you can build solar photovoltaic power capacity more cheaply on an empty field than on ,my rooftop. And yet, I can put solar PV onto my roof right now, and my utility isn’t *actually* doing anything. Why is that?
It’s because I can consider the benefits of avoiding climate change and pollution, but the utility is only concerned with making a profit. That’s the fundamental flaw in this report: it’s only writing about the money. The 384 page report uses the word “pollution” exactly once, and uses the word “health” only 9 times: 6 times referring to “assets” or “networks”, and the other three times describing health problems that arise if the power goes off.
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