Distributed Solar – Part III

To follow up on the April 8 blog post about distributed solar, we thought it would only be fair to share both sides of the distributed solar roll-out plan. Below is a table comparing reasons for accelerating the distributed solar push and reasons for letting it grow more languidly.

 

Accelerated Distributed Solar Roll-Out

Slow Distributed Solar Roll-out

  • The faster the market grows, the faster costs will drop thanks to scale economics
  • The costs will be lower in the future, so let market evolve more slowly.
  • We can find the financing! If we use the annual systems benefit charge as reserve capital, we can loan about $300m a year. Also, if we monetized RECs and added that money as reserve capital, we could loan another $300-400m a year, for a total exceeding what is needed.
  • We cannot find $2.5 billion in needed financing, so why create that problem for us?
  • At any point that distributed solar is not working as a product, we can always stop.
  • The distributed solar might not work as well as forecast, so we should be cautious about the roll out.
  • The increase in rates to everyone else will not occur for many years. When rates do go up, efficiency measures will be more attractive and will lower the total prices paid. In the meantime, many tens of thousands of people will see their rates go down, and will not have to buy generators because we will change the laws and regulations to let them use distributed solar when the grid is down.
  • The subtraction of 10% of the residential user base from utility’s TAM will cause rates to go up for everyone else.
  • If REC prices are higher rather than lower, the impact on ratepayers will not occur for many years and will be offset by buying distributed solar or efficiency measures. Because ratepayers are also citizens, they will be much better off if unemployment drops, the economy grows, and housing prices rise.
  • You cannot finance the rapid roll-out without allowing RECs to be monetized by installers, or by green banks which in turn would use the monetized RECs to provide cash in form of rebate or per kWh subsidy (as done today). If we allow RECs to be monetized, REC prices may not continue to fall, and eventually ratepayers will then have to pay more, or the push for a larger REC will be defeated by utility lobbying.
  • The argument that efficiency is cheaper as a way to lower consumption from the grid has two problems: notwithstanding the power of this point, the obstacles to installing efficiency are stubbornly high and intractable. Also, this is a false choice: let’s do both and see what we can make happen faster.
  • Solar electrons have a true cost higher than 20 cents per kWh. In other words, +4 cents per kWh over current price…whereas the cost of saving electrons through energy efficiency measures is about 0 or even -4 cents per kWh. 

 

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