1. Photovoltaic Systems Engineering Residential PV Systems
SEC598F18
Photovoltaic Systems Engineering
Session 24
Residential PV Systems
Wrap-up and Forecast
November 28, 2018

2. Session 24 - Value to class members
Additional evaluation and analysis of a residential grid-tied PV systems
Policy review
Payback Analysis – Net Metering, Net Billing
Impact of Demand Charges
Forecast
Status of current and future PV markets, costs, etc.
Status of current and future Energy Storage markets, costs, etc.

3. The Solar Enterprise Current US Solar Power 58.0 GW
Both nationally and globally, the solar business has grown by leaps and bounds in the last two decades
Current US Solar Power
58.0 GW

4. The Situation in Arizona
Market Preparation Policies
Interconnection Standards - YES
Import/Export tariffs - YES
Feed-in tariffs - NO
Solar rights policies - YES
Permitting and zoning - YES
Building codes - YES

5. The Situation in Arizona
Market Creation Policies
Renewable Portfolio Standards - YES
Solar Carve-outs - YES
Energy choice, CCAs - NO
Market Expansion Policies
Financial incentives
Grants, rebates, tax incentives - YES
Financing options
Solar leases - YES
Third-part ownership, PACE - NO
Lead-by-example policies - MAYBE

6. The Situation in Arizona
Essential Financial Components
Federal Investment Tax Credit (ITC)
Still in existence, but phasing out
State Solar Tax Credit
Still in existence
Net Metering
Eliminated in APS territory, threatened in TEP territory
Replaced by Net Billing

7. Net Metering vs Net Billing
The Import Tariff (for kWh purchased from the utility) equals the Export Tariff (for kWh sent to the utility)
If the monthly exports exceed the imports, the net kWh are added to an “electricity bank” which can be used to offset bills in months when the imports exceed the exports
The electricity bank is reset to zero annually at the wholesale electricity tariff

8. Net Metering vs Net Billing
The Import Tariff (for kWh purchased from the utility) is higher than the Export Tariff (for kWh sent to the utility)
If the value of the monthly imports exceed the value of the exports, the net value is part of the monthly bill; if the export value exceeds the import value, it is applied as a credit to the bill. If the credit is larger than the bill, it can be carried forward to the next month
There is no banking of kWh or money – the bill is settled every month

9. Net Metering vs Net Billing
The tariffs
The Import Tariff is established by the Arizona Corporation Commission through general rate case hearings. At present time, it is roughly $0.139/kWh (APS).
The Export Tariff is also established by the ACC, and the initial amount was determined through a Value of Solar docket, using a resource comparison calculation. At present time, it is roughly $0.129/kWh (APS). The docket also established a declining escalator clause to the value (appproximately 10%/year)

10. The Value of Solar What should the export price point be?
The Utility Position
It should be set at the lowest replacement cost. The utilities can buy electricity in the wholesale markets, so they should not have to pay retail ($0.03/kWh)
The Solar Industry Position
It should be set at the retail electricity cost, or higher. The calculation of the retail cost does not include economic factors such as delayed capital expenditures, or any of the so-called externality costs ($0.27/kWh)

11. The Value of Solar
An NREL study described two market scenarios which could emerge from a Value of Solar calculation
This come from a comparison between the LCOE of the residential PV system and the VOS tariff
VOS tariff < LCOE
Installation costs not likely to be recovered, and additional incentives are needed to reduce the difference and sustain the solar market
VOS tariff > LCOE
An acceptable payback period is achieved and the solar market is self-sustaining

12. APS Net Metering – Generation Bill
Avoided Electricity Cost = 0.123$/kWh * 5225kWh = $643

13. Simplified Cash Flow Diagram
Increased by NEM
Reduced by ITC

14. Revised current residential
Payback –> 10.5 years

15. SRP Demand Charges
The billing demand is the maximum thirty-minute integrated kW demand occurring during the on-peak periods of the billing cycle
These charges are modest in the months of low utility region usage, but can be quite substantial in the months of high utility region usage
The power demand charges are an additional charge above the electrical energy usage charge
SRP calls the demand charge a “price signal”

16. SRP Demand Charges - Example
The average high power demand at a residence in the summer is 2kW. Suppose there is a spike in power demand to 12kW for 30 minutes once in the billing cycle
Without the spike, the demand charge would have been
2kW*$8.03/kW = $16.06
With the 12kW spike, the demand charge would be
3kW*$8.03/kW + 7kW*$14.63/kW + 2kW*$27.77 = $182.04
Demand Charge
First 3kW
Next 7kW
All additional kW
Winter
$3.41
$5.46
$9.37
Summer
$8.03
$14.63
$27.77
Summer Peak
$9.59
$17.82
$34.19

17. Proposed APS Demand Charges – Same Example
The average high power demand at a residence in the summer is 2kW. Suppose there is a spike in power demand to 12kW for 60 minutes once in the billing cycle
Without the spike, the demand charge would be:
R1 2kW*$6.60/kW = $13.20
R2 2kW*$8.40/kW = $16.80
R3 winter 2kW*$11.50/kW = $23.00
R3 summer 2kW*$16.40/kW = $32.80
With the 12kW spike, the demand charge would be:
R1 12kW*$6.60/kW = $79.20
R2 12kW*$8.40/kW = $100.80
R3 winter 12kW*$11.50/kW = $138.00
R3 summer 12kW*$16.40/kW = $196.80

18. What can a rooftop solar customer do?
Design the system to “shave” the power demand peaks
Orient the solar modules to the west, to maximize the solar power generated late in the day
Operate the system with energy management strategies to eliminate the occurrences of peak surges
The utilities sometimes couple demand charges with lower energy (volumetric) charges
Employ energy arbitrage strategies (buy low, sell high)

19. Forecast for future residential customers
Replacement of traditional PV systems with Solar+Storage systems
Backup Power
PV Self-Consumption
Time of Use (TOU)
Demand Reduction
M.B.Krause and D.Brearley, “Residential Energy Storage Economics,” SolarPro, July/August 2016, pp 22-36
Rocky Mountain Institute (RMI), THE ECONOMICS OF BATTERY ENERGY STORAGE, October 2015

20. Forecast for future residential customers
M.B.Krause and
D.Brearley

21. Forecast for future residential customers
Solar+Storage requires Energy and
Power Mangaement Systems
Adara Power
Pika Energy
Eguana Technologies
Schneider Electric
Enphase Energy
SMA America
Fronius USA
SolarEdge Technologies
JLM Energy
Sonnen
Magnum Energy
Sunverge
OutBack Power
Tesla/Solar City

22. Forecast for future residential customers
Pika Energy Island

23. Other New Approaches Technological Factors (Solar+Storage)
Aggregated residential S+S systems
More offerings for S+S systems at the C&I scale
Sophisticated microgrid offerings with community solar, residential solar, smart storage, smart inverters, battery storage, etc.

24. Sonnen
“Sonnen targets utility contract for Arizona aggregated storage project:
The company aims to equip 2,900 homes with solar panels
and a battery to provide peak demand during evenings.”
Utility Dive, Peter Maloney, 11/06/18

25. SEIA/WoodMac forecasts
1. US Solar Market Insight: Q3_2018 Executive Summary 2. US Energy Storage Monitor: Q3_2018 Executive Summary

26. US Solar Market Insight: Q3_2018

27. US Solar Market Insight: Q3_2018

28. US Solar Market Insight: Q3_2018

29. US Solar Market Insight: Q3_2018

30. US Solar Market Insight: Q3_2018

31. US Solar Market, 2015
Greentech Media, 2015

32. US Solar Market Insight: Q3_2018

33. US Energy Storage Monitor: Q3_2018

34. US Energy Storage Monitor: Q3_2018

35. US Energy Storage Monitor: Q3_2018

36. Solar Cells, invented at Bell Labs
Telstar 1962
14 W