By Cliff Montgomery – Mar. 19th, 2017
A structure powered by solar energy often generates excess electricity. That extra power can be a financial boon to those who employ the technology at their house or place of business.
“A Department of Energy funded database of renewable energy incentives identifies 41 states with net metering policies that require electricity suppliers to credit customers for electricity sent from their solar systems to the grid,” according to an eye-opening study recently released by the Government Accountability Office (GAO).
But the GAO has identified a major problem.
“Grid operators GAO interviewed said they have begun to confront grid management and other challenges in some areas as solar deployment increases,” declared the study.
“For example, in some areas of Hawaii, solar systems have generated more electricity than the grid was built to handle, which resulted in the need for infrastructure upgrades in these areas,” added the GAO report.
One wonders what might become of these new possibilities in the age of Trump budgets.
Below, the American Spark offers generous quotes from the GAO report:
Why GAO Did This Study
“Traditionally, electricity has moved in one direction—from electricity suppliers to customers. Today, solar systems allow electricity to be generated at a customer’s home and sent to the grid for electricity suppliers to use to meet other customers’ electricity needs. Storage systems allow residential customers to store electricity from the grid or their own solar system for use at a later time.
“Furthermore, customers can use smart devices, such as thermostats, to manage their electricity consumption.
“GAO was asked to provide information on the deployment and use of technologies that give customers the ability to generate, store, and manage electricity.
“This report describes (1) key federal and state policies used to encourage the deployment of these technologies, (2) the extent to which these technologies are being deployed, and (3) the benefits and challenges of deploying these technologies.
“GAO analyzed available data on technology deployment from EIA [Energy Information Administration] and reviewed relevant reports and regulatory documents.” […]
“GAO is not making recommendations in this report.”
What GAO Found
“Federal and state policymakers have used a range of policies to encourage the deployment of solar systems and other technologies that allow residential customers to generate, store, and manage their electricity consumption.
“For example, federal tax incentives—such as the investment tax credit—have reduced customers’ up-front costs of installing solar systems.
“In addition, a Department of Energy funded database of renewable energy incentives identifies 41 states with net metering policies that require electricity suppliers to credit customers for electricity sent from their solar systems to the grid, providing an additional incentive.
“Moreover, in 14 states, customers can also receive state tax credits for installing solar systems, according to the database, which further reduces the up-front costs.
“According to GAO’s analysis of Energy Information Administration (EIA) data, deployment of solar systems has increased significantly in some states, with the total number of residential customers with solar systems increasing sevenfold from 2010 to 2015.
“However, customers with solar systems represent a very small portion of overall electricity customers—about 0.7 percent of U.S. residential customers in 2015, according to EIA data.
“Every state experienced growth in the number of customers with residential solar systems, although certain states, such as California and Hawaii, accounted for most of the growth and have had more widespread deployment.
“For example, about 14 percent of residences in Hawaii have installed a solar system, according to EIA data.
“Although comprehensive data on the deployment of electricity storage systems and smart devices are not available, the data and information provided by stakeholders GAO interviewed suggest their deployment is limited.
“The increasing residential deployment of solar systems and other technologies poses potential benefits and challenges, and some policymakers have implemented or are considering measures to address these, as GAO found in its analysis of reports and stakeholder interviews.
“Specifically, these technologies can provide potential benefits through more efficient grid operation, for example, if customers use these technologies to reduce their consumption of electricity from the grid during periods of high demand.
“Nonetheless, grid operators GAO interviewed said they have begun to confront grid management and other challenges in some areas as solar deployment increases.
“For example, in some areas of Hawaii, solar systems have generated more electricity than the grid was built to handle, which resulted in the need for infrastructure upgrades in these areas.
“However, grid operators reported that challenges generally have been manageable because overall residential solar deployment has been low.
“Policymakers in some states have implemented or are considering measures to maximize potential benefits and mitigate potential challenges associated with the increasing deployment of these technologies.
“For example, two states’ regulators have required electricity suppliers to identify areas of the grid where solar and other technologies would be most beneficial to grid operation.
“In addition, several state regulators recently have allowed electricity suppliers to adopt voluntary time-based electricity prices that increase when demand for electricity is high, providing customers with an incentive to reduce consumption at these times, potentially by using solar, storage, and other technologies.” […]
Determining customer prices
“State regulators periodically hold proceedings to determine how much customers will pay for electricity, according to our review of several reports from DOE [Department of Energy] and stakeholders.
“To determine these prices, state regulators calculate the revenues an electricity supplier will need to cover the supplier’s costs. This calculation is based on the total cost of serving electricity customers, such as costs for personnel and fuel.
“It also includes the cost of investments in infrastructure, such as power plants and transmission lines, plus a level of return on these investments that state regulators determine to be fair.
“Regulators divide this revenue requirement by an estimate of expected sales in kWh [kiloWatt hours] to determine an average price to charge customers (usually in cents per kWh).
“This calculation is done separately for different customer types—residential, commercial, or industrial.
“Because these proceedings are complex and time consuming, they are only held periodically, according to our review of several reports. Once prices are established, they often remain fixed until the next proceeding.”
