The California Public Utilities Commission (CPUC) has agreed to factor in future avoided transmission costs when valuing distributed energy resources (DERs), marking a big win for California ratepayers.
According to the Clean Coalition, transmission infrastructure, which has to be built to service maximum load, accounts for the fastest growing component of electricity bills, often exceeding the cost of energy generation in California.
“This is an important first step that deals with considering future transmission costs, which appear to be in the range of 2.5 cents per kWh, but [it] still fails to consider historic transmission costs, which are reflected in transmission access charges, with an additional cost of about 3 cents per kWh,” said Craig Lewis, executive director of the Clean Coalition. “Obviously, leaving 5 cents per kWh out of the value of DERs results in a massive market distortion that steals value and market opportunity from DERs.”
Clean Coalition estimates that the value of DERs has been robbed by as much as 50% because the CPUC’s avoided cost calculators (ACCs) did not include avoided transmission costs in valuations of DERs. Importantly, DERs reduce the need for new transmission infrastructure to address load growth.
“Most ratepayers, and policymakers too, have no idea that operations and maintenance costs associated with transmission infrastructure account for about 90% of transmission costs that are heaped on ratepayers over the lifetime of that infrastructure,” said Lewis.
If energy storage is part of the DER mix, the savings gains are even better. “Standalone solar reduced peak transmission grid utilization by about 25 percent of the solar nameplate, while solar-plus-storage can reduce the peak by the full nameplate of solar. Simultaneously, solar-plus-storage can provide an unparalleled level of resilience to communities,” he said.
“We applaud the CPUC for ensuring that the ACC reflects the savings from avoided future transmission infrastructure investments,” Lewis said, noting that the Clean Coalition has been fighting for proper transmission cost allocations for the past decade.
Until now, avoided transmission valuation has been omitted in the ACCs of Southern California Edison and San Diego Gas & Electric. But before the recent CPUC decision, the ACC already included avoided future transaction costs for Pacific Gas & Electric (PG&E). The updates to the ACC will include all three investor-owned utilities and will refine the methodology used for PG&E.
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.
Really, transmission and distribution is pretty much paid for when a developer comes to town and constructs a new commercial, industrial, or even a new housing tract. The utility infrastructure is developed, installed, inspected and somewhere along the line accepted by the utility as “their own”. In all probability most utilities, even the electric utilities are allowed the practice of accelerated depreciation on older assets and infrastructure. These TD&D charges, don’t seem to account for depreciation and the tax advantage the utility enjoys. Also I’ve noticed that a (lot) of solar PV and wind generation operating practices is to “curtail” solar PV and or wind generation during the so called “duck curve” while using spot market fueled electricity to ramp around grid needs.
So, if I have solar PV and my excess goes back onto the grid and to my neighbor’s house, does he get the “fuel charges” removed from every solar PV kWh his home uses? Don’t think so, if these so called “electric utilities” are concerned by fair play and “fair pricing”, why do they usurp their ratepayers and charge them more than the actual “worth” of the electricity they use each day? There is a push on by Rocky Mountain Power, owned in part by Berkshire Hathaway, that says, solar PV pushed back onto the grid should be worth 1.5 cents/kWh. Apparently this entity wants to “determine” what the wholesale rate of electricity is from residential solar PV systems, but are hypocritical when the utility itself owns the asset. Rocky Mountain Power still has about 10 coal fired generation plants online, now do these plants provide electricity on the wholesale market at 1.5 cents/kWh? Coal fired in Wyoming right now can be as low as $66/MWh of generation, yet solar PV and wind generation can come in at the $30 to $50/MWh, using energy storage one can stack grid services and bring prices down lower and use “intermittent” generation resources as dispatchable non-fueled energy resources. Wyoming, I believe has placed a $5/MWh (tax) on wind generated power. Even with that usury, wind generation is cheaper than coal fired plants. So, yeah, 1.5cents/kWh is total B.S. RMP is low balling. Where oh where are those RICO Statues when you need them?
All this “Avoided Cost/Charges” by Solar Facilities is (mostly) utter nonsense and has been “sold” by Edison Institute (a Utility Association) based on VOODO ENGINEERING & Funded by Self-Interest only.
Let me explain:
1. Remember…. Solar Power is available during Peak Loads when Utilities need “all the help” they can get to Meet & Limit Generation/Energy Costs.
2. Most Residential Systems are NEAR THE URBAN LOADS and the “electrons” emanating from them DONOT FLOW OR TAKE PERMISSION FROM THE TRANSMISSION & DISTRIBUTION SYSTEM…. they just feed their neighbor(s)…. this is known as a PUSH-N-PULL System. In such a system you push power when one has surplus… and pull when you need some…. without using a circuitous route via the T&D system. In any case…. this “T&D System” is already “ready to collapse” as it tries…n..tries to pick up the loads or buy Power from its Captive or Others Generating Stations located… usually…. far…. far… away… sometimes even in Canada.
3. Also if the power fed is directly from adjacent Rooftops rather than those… very remote Generating Stations… the lower current in those lines also reduces and so do the Losses. Remember Losses are based on the Square of the Current (CurrentsXCurrent). So if Current is reduced by 10%… the LOsses are reduced by 19% (1- 0.9X0.9).In addition.. the lower current also heats up the conductors less… further reducing losses linearelly. EEI & Utilities never tell you this… as they claim they….. KNOW IT ALL. (By the way I am Retired Professional Electrical Engineer for 30 years plus).
4. There is a situation where those Rooftop/Solar Farms are away from the Urban Grid/Load. In this case… they DO USE the T&D System and should “bear some of the burden” for “dispatching” their power to the remote consumers.
5. Now…. let me introduce you to the concept of LSA & GSA (EEI don’t have a clue what I am talking about… THEY KNOW IT ALL).
LSA… Is a Load Surplus Area (excluding local/distributed Generation) where the (mostly) Urban Areas NEED POWER that has to be “imported” from outside.
GSA… Is a Generation Surplus Area where excess Power exists and is “exported” to Other Areas.
6. Solar Installations in LSA DONOT NEED OR USE THE T&D System (excluding the minimal lines to their neighbors… already paid for by their neighbor(s) to the Utility) and, therefore, and additional charge does not arise. In fact… THESE SOLAR INSTALLATIONS SHOULD BE COMPENSATED AND REWARDED FOR “HELPING” THE GRID/UTILITY OUT … AS THE LATTER DONOT HAVE TO BUY EXPENSIVE POWER AT THAT TIME OR INSTALL EXPENSIVE GENERATING FACILITIES TO MEET THEIR LICENSE CONDITIONS OF UNINTERRUPTED POWER… TO ALL… 24/7.
Remember… the Lower Losses in the T&D System menioned earlier.. has ANY EEI Paper or Utility EVER ACCEPTED THIS FREEBIE OF LOWER LOSSES…. due to lower Currents and Resistance through their T&D System …. during Peak Load conditions when Losses are the most ….. SAVING THEM BILLIONS DURING THIS “TIME OF NEED AND PRICE GOUGING” TOO.
7. Now regarding those Solar Installations in GSA’s…. they should “bear the T&D Burden” of Usage, Losses, etc. However, they MUST ALSO BE REWARDED AND COMPENSATED FOR AVOIDED GENERATION/ENERGY COSTS INCURRED USING THE PEAK RATES AT THAT TIME.
8. Now when the Sun Sets and the Solar Installations are…. sleeping; the LOADS ON THE OVERALL SYSTEM ALSO GOES DOWN and the T&D System now operates at part/low(er) Capacity. Now if the Night-Time Loads of these LSA Solar Facilities is (almost certsinly) Offset by the reduction of their neighbors…. THEM NO ADDITIONAL BURDEN IS PLACED ON THE T&D SYSTEM AS THE DESIGN BASIS AND CAPABILITY IS THE PEAK…. DAY TIME LOAD. The Utility has already been compensated in FULL by the Connected Daytime Loads.
This also applies to Solar Facilities in GSA Areas as their night-time loads would be much less than the Daytime Burden on the Grid.
In other words…. use of the Grid during the night POSES NO NEW BURDEN ON THE GRID FOR BOTH LSA & GSA located Solar Facilities.
9. It is clear from the above… that a “UNIFORM POSTAGE STAMP” RATE FOR SOLAR ENERGY FACILITIES IS UNFAIR & INAPPROPRIATE.
Therefore… Regulatory Commissions must ask Utilities to Define LSA & GSA’s. These can be readily determined by Electrical System Studies/Simulation done by Utilities; Then Reviewed, Accepted and Approved by the Commission(s) and/or Consumer Groups/Representatives. This will ensure Utilities are not “double dipping” and/or penalizing Solar Installations.
10. In addition, LSA’s must be “Rewarded” for “Helping Out” the Grid when needed most to Ensure/Support Grid Stability too.
11. As LSA Generation is located near the Loads, it also help “The Load Angle”…. and then there is Pollution and Nuclear Waste Costs NOT LEVIED ON POLLUTERS that kill 200,000 Annually in the US alone…. at an estimated $1.2Trillion Annually ($6 Million/Victim) in the USA… which these Solar Installstions help reduce .. one life and hundreds of Suffering at a time… but this is another story/claim for another day…
Thank you for the deep dive into some of these IOU declarations and pointing out some (more) avoided costs by electric utilities in general. You’re right, I’ve never heard of or have had explained LSA or GSA, imported and exported power groupings.
I’ve got to find a (hybrid) commercial energy storage combined to a residential solar PV system. For most of my daily energy needs (most of the time) my LSA of a larger than normal solar PV array can be applied to my own personal GSA, commercial sized energy storage system, say in the 150kWh size, with a smart hybrid inverter with the capability of around 20kWh, I believe this would be able to create the on demand power needed to run my home almost always from self generation. I do see that there may be usage profiles where many high surge current devices may turn on at once. The IOU could certainly provide a nice current surge to kick electric appliances on, then back to energy storage and 20kWh to keep the loads up and running.