Updated December 2016
Electric utilities in Arizona are involved in solar energy in many ways. Utilities own or contract to purchase energy from large solar installations, both photovoltaic (PV) and thermal and distribute this energy to their customers. The utilities are also involved with their customers when customer utility interactive photovoltaic systems are connected to the utility grid in order to safely operate their systems and account to the energy transfers. Utilities call these smaller systems Distributed Generation (DG). Some utilities have rebate programs or other incentives to encourage solar hot water systems because these systems reduce the peak demands placed on the utilities.
The economies of scale favor large utility-scale solar systems such as illustrated on the left above, these systems can produce energy for about 60% of the cost of rooftop systems, but the energy must be transported to the areas where it is needed, requiring transmission lines, transformers, and such. About 10% of the energy is lost due to these transmission losses.
The utilities have to manage all the various electrical generation sources to balance the supply of energy with the customer use of energy, while keeping the voltage and frequency of the power within accepted limits. Since both solar generation and customer needs vary, this has become more difficult as the percentage of solar generated energy is increasing. Some of the generation resources, such as nuclear power plants, need to operate at constant power levels, while other sources such as natural gas turbines are designed to be variable. Photovoltaic power systems can be shut off without damage if necessary to help keep energy balanced within the utility system.
When a connected PV system, residence, business, school, etc., is generating more energy than can be used locally, the extra energy is fed back into the utility grid where it is used by other utility customers. The amount of solar generated energy thus fed back is metered by the utility.
The utilities account for this energy several methods. Most popular for the customers is Net Metering wherein the utility acts like a free battery, allowing a customer to later use an equivalent amount of energy for free. Another option is Net Billing wherein the utility basically purchases all the excess energy at a wholesale rate and sells all energy purchased by the customer at retail rates. The rates are set/approved by the Arizona Corporation Commission (ACC) (SRP is an exception since it is not an investor owned utility). Generally, at present net metering is limited to systems that have an output that is 125% of less than the historic power demand of the customer.
The relationship between solar customers and the utilities is changing, see other articles on our website and watch the Blog for current news. On December 20, 2016 the ACC voted to allow utilities to abolish net metering and replacing it with a buy-back rate that will be set by rate hearings. There is a provision for grandfathering existing solar customers already on net metering. DECISION on: INVESTIGATION OF VALUE AND COST OF DISTRIBUTED GENERATION. The Determinations, starting on page 169, are not very conducive to residential and commercial future photovoltaic systems.
The US electric grid continued to transform in 2016. No new coal plants were added, and solar became the top new source of generating capacity.
Arizona solar array. CREDIT: Tucson Electric Power.
Tucson Electric Power to buy new solar power at under 3 cents per kWh, a “historically low price.”
Remarkable drops in the cost of solar and wind power have effectively turned the global power market upside down in recent years.
We’ve seen prices for new solar farms below 3 cents per kilowatt hour (kwh) in other countries for over a year now, but before this week, not in the U.S. That changed on Monday when Tucson Electric Power (TEP), an Arizona utility company, announced that it had reached an agreement to buy solar power at the same game-changing price.
TEP says that this is a “historically low price” for a 100-megawatt system capable of powering 21,000 homes — and that the sub-3-cents price is “less than half as much as it agreed to pay under similar contracts in recent years.”
For context, the average U.S. residential price for electricity is nearly 13 cents per kwh, and the average commercial price is 10.5 cents.
NextEra Energy Resources will build and operate the system, which also includes “a long duration battery storage system” (whose price is not included in the 3 cents/kwh). Also worth noting: The sub-3-cents contracts that have been signed in other countries such as Chile, Dubai, and Mexico are unsubsidized, whereas U.S. prices include the 30 percent Investment Tax Credit.
PV Magazine reports “this is the lowest price” they’ve seen for solar yet in this country. And Bloomberg New Energy Finance chair Michael Liebreich explained last month that thanks to recent price drops, “unsubsidized wind and solar can provide the lowest cost new electrical power in an increasing number of countries, even in the developing world — sometimes by a factor of two.”
The TEP contract is one more sign that the renewable revolution is unstoppable.
Thursday (May 18, 2017) the Arizona Court of Appeals ruled that companies leasing rooftop systems to homeowners should not be subjected to a new set of property taxes that the Department of Revenue only recently sought to impose on these businesses.
The ruling upheld a lower court judgment in part and reversed the tax court in part as well. The court ruled the state’s Department of Revenue incorrectly determined in 2013 a leased rooftop solar system should be subject to property tax by misinterpreting the laws that say otherwise.
Rooftop solar companies, SolarCity and SunRun sued the department, arguing the panels were designed primarily for customers’ own on-site consumption, not in the operation of an electric generation facility that sends electricity to customers over transmission and distribution lines.
The Department of Revenue reinterpreted the state’s law in 2013 and started valuing property for taxation for the first time, after thousands of panels had been leased without being assessed for taxation purposes.
From Rose Law Group: Court of Appeals rules no property tax for rooftop solar panels
(Disclosure: Rose Law Group represents one of the taxpayers that prevailed in this ruling.)
Put this on your calendar!
The morning of Monday, August 21, 2017, a total eclipse of the sun will occur and is expected to have a dramatic impact on the electric grid in the U.S. The path of totality will extend from South Carolina on the East Coast to Oregon on the West Coast. California's San Juaquin and Coachella valleys, both key solar producing regions, will see coverage of around 76% and 62%, respectively. And, although it will be spared the full impact, California is planning for the potential of major disruptions in its grid as the production of electricity from photovoltaic installations falls from a normal level of over 8,700MW to 5,600MW while demand is rising by 1,300MW primarily due to the increased use of electric lights.
Worse-case estimates by the California Independent System Operator (CAISO) predict as much as a 4,200MW reduction in solar generation. Regardless of the actual decrease, the rate of change will be significantly higher than the system was designed to handle and will be a particularly difficult-to-manage problem. The typical ramp rate for the grid at sunrise and sunset is about 29MW per minute. The ramp rate during the eclipse is forecast to be 70MW per minute during the drop off and nearly 100MW per minute during the ending phase of the eclipse.
The rapid return of PV electricity at the end of the eclipse (3X the rate the grid is designed to handle under typical conditions) is expected to be particularly difficult for the grid to absorb without going into an overload condition. As a result, CAISO is working to coordinate a “ramp up plan” that will place limits on how quickly PV power can be ramped up from the peak of the eclipse at about 10:22 a.m. until the end of the eclipse at 11:56 a.m., possibly extending into early afternoon.
Behind-the-meter solar generation will be particularly hard to control and hence its impact will be difficult to estimate. Currently CAISO is obtaining behind the meter solar generation forecasts as well as large scale solar generation forecasts from two forecast service providers. The providers will be producing a forecast accounting for the solar eclipse that will automatically feed through the ISOs daily processes. The aggregate forecast for large scale solar will be available to the market participants, as well as public, through the OASIS applications.
Knowing that the critical information needed to have the most accurate forecast possible will be feeding into the market optimization as well as other processes will assist greatly in optimizing the market with the solar eclipse. In addition to the above some of the additional actions and processes to be followed will include:
- Reserves procurement: Due to the predicted movement of the transmission connected solar resources CAISO plans to commit an increased amount regulation up and regulation down to assist with the increased ramp rate of the resources. The available regulation resources will be increased to 400MW from the normal level of 250MW.
- Hydro Generation Usage: Due to the above average hydro year this water season it is expected that come August California will still have availability for hydro to carry regulation and/or energy during the eclipse. CAISO will be working with the hydro community and inform participants of the additional need for flexibility on August 21st due to the eclipse to assist with that flexibility being available to the market optimization.
- EIM (Energy Imbalance Market) Transfers: The EIM provides a mechanism to share and diversify resources to assist in more enhanced management of the solar eclipse moving across the Western United States. Due to the forecasts for behind the meter and large scale renewable resources being in the market optimization, the EIM transfers will be optimized through the market dispatch. It will be important that all EIM participants account for the solar eclipse effects on their solar renewable resource forecasts in their base schedules that are being submitted by their forecast service providers as well. The Pacificorp EMI is owned by Warren Buffett’s Berkshire Hathaway Energy. Pacific Power (PACW), its western arm, serves electricity customers in Oregon, Washington, Idaho, Wyoming, Montana, and California. Rocky Mountain Power (PACE), its eastern arm, serves Utah, Idaho, and Wyoming. Nevada and Arizona operate independently as participants in the Western states EMI.
- Gas Coordination: CAISO will coordinate with Southern California gas and thermal generators to ensure they have procured enough gas to handle generation deviations during the day of the solar eclipse.
- Outage Coordination: CAISO will be analyzing the impacts of scheduled generator and transmission outages prior to approving for August 21st.
Future events like the August eclipse have the potential to be even more disastrous. Today, California uses about half of U.S. solar capacity and about 10 percent of the state’s electricity is from PV; enough to power Los Angeles. A new estimate from the U.S. government shows that California met its goal to produce about half the state's electricity from renewable sources for three hours on March 11. The estimate comes from the U.S. Department of Energy's statistics division.
The U.S. Department of Energy's statistics division used data from the CAISO, which manages the electricity grid across 80 percent of California and part of Nevada. The record was set when almost 40 percent of the electricity flowing across the grid came from large-scale solar power plants. Factor in electricity produced by area homes and businesses, and solar met about half the overall electricity demand in the middle of the day. California aims to have 50 percent of all electricity come from renewable sources by 2030.