Utility Solar Business Models
Utility Solar
Business Models
February 16, 2009
Julia Hamm
SEPA Executive Director
Outline
• About SEPA
• Historical Utility Solar Engagement
• Utility Solar Business Models
What’s a ‘utility solar business model’?
Recent examples from around the U.S.
About SEPA
About SEPA
• 501(c)3 membership organization
• Reliable source of unbiased information
about solar technologies, policies, and
programs
• 110 utility members
• 400 solar industry and “stakeholder”
members
• FREE on-going memberships for PUCs
and state energy offices
Historical Utility
Solar Engagement
Utility Engagement
• Research and Development
• One-Off Demonstration Projects
• Facilitation of Customer-Owned PV
Top U.S. Solar Integrated
Utilities
Total Solar Electric Capacity (MW-ac)
Cumulative through December 2007
Source: Solar Electric Power Association
CONFIDENTIAL
Top U.S. Solar Integrated
Utilities
Solar Electric Capacity Per Customer (Watts-ac/customer)
Cumulative through December 2007
Source: Solar Electric Power Association
CONFIDENTIAL
Startling Facts
• 97% of all U.S. solar generation is in 10
utilities’ service territories
• 50% of all photovoltaic installations are
in PG&E’s service territory
Utility Solar
Business Models
What’s a ‘utility solar business
model’?
• A promising utility solar business model –
creates value in the energy marketplace
enables the utility to capture part of that value
will sustain itself over time
• It must serve multiple stakeholders –
OWNERS
CUSTOMERS
SOCIETY
• IOU shareholders
• participants
• IOU regulators require it
• POU community
• non-participants
• POU officials represent it
• protected groups
• Cost-effectiveness is the key
• Win/win/win is the goal
What’s a ‘utility solar business
model’?
• Business model elements include -
utility roles • buy output • acquire projects • develop projects
• own assets • provide services • incentivize others . . .
•
others’ roles
provide a site • sell &/or install equipment • develop projects
• provide maintenance • buy or aggregate output . . .
• value streams & magnitudes • cost/benefit allocations
economic impacts
• project & aggregate impacts . . .
• ratebase • revenue impacts • incentives . . .
regulatory treatment
Why it’s timely to look at them
• Climate change is accelerating
• Solar technology is maturing
• Solar costs are dropping
• RPS requirements are proliferating
• Utility generation options are narrowing
• Tax changes expand utility solar options
• Utilities need new business models
to deliver 21st-century resources
Multiple Business Model Options
• 2008 SEPA study identified 13 solar
business models under consideration by
various utilities
• “Utility Solar Business Models:
Emerging Utility Strategies &
Innovations” available for free download
at www.solarelectricpower.org
• Phase II of the study is now beginning
Business Model Categories
• 13 models fall into 3 categories
Utility ownership of solar assets
Utility financing of solar assets
Utility purchase of solar output
Ownership Examples from Around
the U.S.
• Utility Ownership of Distributed PV
Proposals for rate based programs – examples:
Southern California Edison (250 MW rooftop)
San Diego Gas & Electric (77 MW ground mounted)
Duke Energy (10 MW combination rooftop and ground
mounted)
PSE&G (120 MW combination including rooftop, ground
mounted and pole-mounted)
Various siting options
Commercial customers’ rooftops
Utility property (buildings, substations, street lamps, poles, etc)
Government facilities & schools
Affordable housing developments
Ownership Examples from Around
the U.S. – Continued
• Utility Ownership of Community Solar
Equipment
Utility owns and sells “shares” to customers
Virtually net-metered
Makes solar an option for renters, those who can’t
afford a full residential system, etc
Largely municipally driven currently (SMUD, City of
Ellensburg, City of St. George) but under consideration
by many IOUs
Financing Examples from Around
the U.S. – Continued
• Utility Loans to Customers
Grant loans to residential & commercial customers for
the cost of solar installations
Loans repaid in the form of cash or RECs
Cost of program is included in rate base
• Feed-in Tariffs
Long-term fixed price contracts with customers for
renewable generation feed into the grid
Cost burden shared by all customers
Gainesville Regional Utilities, HECO, Public Service of
New Hampshire all implementing or considering
Thank you!
Julia Hamm
Executive Director
202-559-2025
jhamm@solarelectricpower.org
Solar Electric Power Association
www.SolarElectricPower.org
