Fair compensation for rooftop PV generation: lawyers make the case


The Tennessee Valley Authority’s plan to compensate rooftop PV generation at paltry rates has been challenged by the Southern Environmental Law Center (SELC).

TVA proposes to compensate rooftop solar owners—and larger generators—for the power they add to the grid at little more than two cents per kWh.  SELC maintains that rooftop PV generation should be compensated for all the value it provides, and cites a prior TVA value of 7.2 cents per kWh.

SELC appears to be setting up a legal challenge to TVA’s plan in its 57-page letter, addressed to TVA’s program office for NEPA—the National Environmental Policy Act.  NEPA requires Federal agencies such as TVA to evaluate the environmental effects of their actions.

In its letter, SELC maintains that “TVA has failed to comply with NEPA,” and thus cannot end its previous solar compensation program until it issues a draft environmental impact statement that considers “reasonable alternatives and takes a hard look at the effects of the proposal on the human environment.”  Seven other citizens’ groups signed on to SELC’s letter.


TVA and other “brakers” of distributed solar

SELC names TVA as one of three “brakers” of distributed solar in the six states that SELC serves.  SELC likewise calls Alabama Power a solar braker, for its monthly fee on rooftop solar systems, which the nonprofit group Gasp is challenging, represented by SELC.

SELC says that TVA’s new plan for compensating solar production misses several economic and environmental benefits of solar generation, as it considers only avoided fuel and variable O&M (operating and maintenance) costs.

TVA previously provided “example values” for distributed solar totaling 7.2 cents per kWh over a twenty-year period, as shown in the image at the bottom of this story, which SELC provided in its letter.  These values include generation deferral, environmental compliance, renewable energy credits, transmission and distribution deferral, and avoided line losses.

TVA also previously estimated distributed solar’s avoided carbon impacts, worth up to 2.4 cents/kWh, and avoided air pollution impacts at 3.5 cents/kWh.  These would bring distributed solar’s total value to 13.1 cents per kWh, SELC notes.

SELC also provided an analysis from Maine of the value of distributed solar, which found a market value of 9 cents/kWh, plus societal benefits of 9.2 cents/kWh, for a total of 18.2 cents/kWh.


About that avoided cost calculation

A study by Greenlink for SELC showed that TVA’s avoided cost is far greater on a winter peak day than the approximately 2 cents/kWh that TVA offers for solar:

The same study showed that when system-wide demand is low on an April day (with little demand for heating or air conditioning), TVA’s solar compensation is also below its avoided cost (the solar compensation is the same in both graphs, but the scale is different):

Joining SELC in signing the letter to TVA were the Southern Alliance for Clean Energy, the Tennessee Chapter of the Sierra Club, Tennessee Conservation Voters, Tennessee Interfaith Power and Light, Appalachian Voices, Energy Alabama, the Kentucky Chapter of the Sierra Club, and the firm green|spaces.

Three solar “makers” in the Southeast as well

SELC also lauded three “solar makers” in the Southeast: 1) the South Carolina legislature, which unanimously passed the Energy Freedom Act; 2) electric cooperatives in Virginia, which have become “a lot more solar-friendly”; and 3) Solarize Georgia campaigns, which have helped homeowners install more than 500 rooftop solar systems.

SELC’s Rates of Solar website, launched a year ago, provides details on rooftop solar policies for over 400 utilities across the South.

As promised above, here’s TVA’s own previous method for valuing solar; “DG-IV” stands for “distributed generation – integrated value,” TVA’s name of the method:

This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.