20151022 sepa deora slides for deloitte solar growth dbrief

Helping Utilities Make Smart Solar Decisions1

Our Guiding Principles

• Utilities are a critical part of the equation for solar energy to live up to its full potential in serving the public good.

• The regulatory compact must evolve to support utility business models that encourage expanded deployment of central station and distributed solar resources.

• Advancements in grid design, grid operations, and grid technology are needed in order for solar energy to reach maximum potential.

• The long-term economic health of utilities, solar companies and their customers will be strengthened through partnership.


Key Themes & Subject Matter

Key Subject Matter Focus

– Market trends– Rate reform and tariff design– Program design, including

customer engagement– Utility Scale Solar & Storage in

Integrated Resource Planning– Distributed Resource Planning– Distribution grid integration– Wholesale markets integration– Asset management– Energy analytics – Clean Power Plan

Implementation

Key Themes

Transforming the gridThe transmission and distribution systems will undergo significant change in the future to accommodate the growth of DERs and the rapid advancements in available control technologiesAdapting the utility business modelUtilities will need to make changes to their core operations and offerings to adapt to a future that is more distributed and bi-directional in natureProactively engaging consumersCustomer engagement is critical to the success of tomorrow’s grid, and understanding customer desires up front rather than after-the-fact can drive innovation and successDiversifying energy portfoliosUtility-scale solar, large- and small-scale storage, and DERs will be leveraged to create a least-risk and ultimately least-cost energy future


Solar PV Market Segments

Source: SEPA’s 2015 Solar Market Snapshot(www.sepatop10.org)


Utility Scale Solar has Arrived

2008 2009 2010 2011 2012 2013 2014 2015$0

$25

$50

$75

$100

$125

$150

$175

$200

Contract Execution Date

Cont

ract

Pric

e ($

/MW

h)

Announced Utility Scale Solar PPA Prices

Source: GTM Research


Utility Scale Solar PV

Drivers (Utility)• Renewable Energy

Standards • Economics

(Cost, Hedge, Diversity)

• Clean Power Plan

Opportunities• Asset Ownership• Transmission

Build-Out

Challenges• Integrated

Resource Planning (IRP)

• Interconnection Process Management

• Capacity Valuation• Integration -

Forecasting• Cost Forecasting &

Procurement


Commercial & Industrial Customers Are Independently Driving Demand

Source: www.buyersprinciples.org

World Resources Institute Buyer’s Principles Participants:


Commercial & Industrial Solar PV

Drivers (Customer)• Demand Charge

Avoidance• Energy Cost

Savings• Energy Cost

Stability• Green Credentials

Opportunities• Economic

Development• Key Account

Engagement

Challenges• Key Account

Management• Distribution



• Integration – Distribution Infrastrusture

• Revenue Erosion

Helping Utilities Make Smart Solar Decisions

A Compelling Sales Pitch for Residential Solar PV - Today

8Source: www.solarcity.com


Once solar costs level out, with typical utility rate inflation rooftop solar will be economic under virtually all rate designs – even with the ITC stepping down

Standard Rate Increased Fixed Charge Demand Charge Full Fixed Cost Recovery¢

2¢

4¢

6¢

8¢

10¢

12¢

14¢

Solar Efficacy in 2020 - 10% ITCAssumes $1.5/watt rooftop install cost & rate inflation at utility retail

rate average from 1990-2013

Solar LCOE Range varies by orientation and location

$5 Fixed, 12.3¢ variable $20 Fixed, 10.4¢/kWh variable $5 Fixed, $10/kW demand, $55 Fixed, 5.9¢/kWh variable 8.3¢/kWh variable

Residential Solar Is Near Its Next Tipping Point

Source: SEPA Analysis


Residential Rooftop Solar PV

Drivers (Customers)• Cost Savings• Cost Stability• Choice and/or

“Energy Freedom”• Green Attributes

Opportunities• Consumer

Engagement• Revenue Stream

Through Financing and/or Ownership

• Public Relations

Challenges• Value of Solar and

Rate Reform• Distribution



• Integration – Visibility

• Revenue Erosion

Helping Utilities Make Smart Solar Decisions

Community Solar

Rooftop

More Less

Rooftop

Green Pricing Program

Residential SolarPotential Customer Offerings

Attractiveness

Green

Accessi

ble

Rate

Stabiliz

ingMobile

Perf.

Risk

Mitigating

Visible

Source: SEPA Analysis


Implications and Key Take Aways

• Solar growth will continue, based on increasingly compelling economics, across all market types.

• The next constraint facing solar adoption will be integration challenges – engineering and economic.

• Utilities are learning how to turn this “threat” into an opportunity – for both customers and shareholders.

• Solar PV will be one part of a clean energy portfolio, which will include mix of bulk power and distribution system scale resources.

20151022 sepa deora slides for deloitte solar growth dbrief

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