America's Power Plan, Part 3: Smart Policies for Distributed Generation

a guest post by Ken Whiteside, Director of Business Development at ONTILITY, LLC.

America Power Plan Part 3 Smart Policies for Distributed Generation

These days, it isn’t a big challenge for electrical contractors to get into the solar business. Barriers to entry that were daunting if not impossible just two years ago are mostly gone. The equipment is better, there are more financing options, costs are dramatically lower. To illustrate that there is healthy, growing demand for distributed generation, just look at the solar equipment available at your local hardware store. Now even IKEA is selling solar panels. This growth, however, may be hindered by regulations designed for a by-gone era. Bringing these regulations up-to-date is a key factor in building a successful transition to a clean energy future and a dependable and profitable solar energy industry. There are five major categories on which local, state, and federal policy-makers need to focus their attention to promote the continued expansion of distributed generation in both retail and wholesale markets.

Net Energy Metering (NEM): Everyone in the energy business needs a simple, certain, and transparent method for pricing the power that distributed power producers supply to the grid. Regardless of where you are in the supply chain, you need to know that power produced by distributed generation will be paid for equitably. NEM has served this purpose well and should be continued. Policy makers should address concerns over NEM by using the same type of cost-effectiveness analyses that have been used for many years to assess other demand-side resources such as energy efficiency and demand response.

Shared Renewables and On-Bill Financing: Many electricity customers do not have a rooftop suitable for solar. Many apartment dwellers and other renters want to participate in clean energy, but obviously can’t install solar on the buildings where they live and work. Shared renewables programs, like community solar, and on-bill financing, like the program being launched in Hawaii in 2014, can address this problem. In the case of shared ownership, larger, centralized solar projects can distribute power to subscribers or community members using the existing power grid. With zero-down-payment, on-bill financing, loan payments are offset by utility saving resulting in a net gain for customers. Laws and policies that stand in the way of these and similar models must be removed. Governments should promote these kinds of initiatives whenever and wherever they can.

Procurement of Wholesale Distributed Generation (DG). Utilities can and do use DG to help meet state Renewable Portfolio Standards – that’s been going on for years and continues to be a significant solar market driver in many locations. Utilities can also use DG to hedge against the future development of new fossil fuel power plants and to respond quickly to load growth. A variety of administrative or market-based pricing mechanisms should be used to procure wholesale DG under the long-term contracts that provide the investor confidence that enables renewable energy projects to move forward.

Interconnection Standards and Local Permitting. Expensive, time-consuming and unnecessarily complicated interconnection requirements and poorly designed permitting processes both present major barriers to DG development. They need to go. Make it simple and inexpensive. There are plenty of well-tested models for how best to do this.

Integrated Distribution Planning (IDP). DG holds great promise as a means to reduce transmission and distribution costs, but only if utilities integrate DG into their planning for delivery networks. IDP is a coordinated, forward-looking approach under which utilities plan in advance to upgrade or reconfigure certain circuits that are expected to have DG added in the near future, and make the associated costs known to the market with far more transparency than is common today.

You may be asking at this point: Why should I care about changing policies? I’m a contractor.

I’ve written before that all of us who are in the electric energy business, regardless of our position in the value chain, need to be aware of the big changes afoot. We all need to participate in every way possible to ensure that the electrical industries continue to be as robust and prosperous as they have been for the past 100 years. Consumers will continue to demand access to distributed energy, and these policy recommendations can help clear the path.

Ken Whiteside photo Ken Whiteside has been a fan of solar energy for decades. His first hands-on experience was installing solar on off-grid houses around Telluride, Colorado in the 1990’s (summer in the San Juan Mtns. - somebody had to do it). From his home in Austin, Ken writes and works for widespread adoption of solar electricity, smart energy production and use, and sustainability.

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