Electric SUN Will Test the Solar Value Hypothesis

     Electric utilities’ costs vary wildly depending on location served, time of day and season. On mild nights, the cost to serve a customer may be as much as five times less than the retail electric rate. On sunny summer days, when a solar energy system is most productive, the cost of serving some customers’ energy demand can be more than 10 times greater than the retail electric rate. Twenty percent of US electric utility customers already live where solar energy costs less than peak power costs, according to a 1997 study by the Solar Energy Industries Association cited in the 2004 Power Switch by World Wildlife Fund.

     Solar energy costs continue to decline as production expands. Historically this has resulted in solar costs dropping about 20 percent each time total installed capacity doubles. Despite short-term price spikes due to materials and manufacturing capacity shortages and other value-chain management issues, this trend will likely persist. In fact, some stakeholders await dramatic price decreases from next-generation solar technologies. While new technologies will eventually be realized, the fact is, solar is poised for tremendous growth today.

     Electric SUN participants will intensively evaluate the time- and location-specific economic benefits of using distributed solar energy resources, from the perspective of their internal economic interests. These benefits could be worth quite a lot. Some benefits of distributed solar resources, such as reduced fuel cost volatility and reduced carbon and financial risks, are produced at all customer locations. Other benefits, such as peak demand cost reductions, avoided construction of a new substation, avoided re-building of underground utility distribution systems, deferred transmission construction, or increased circuit reliability, are location and time specific. Studies by noted research agencies and projects, including EPRI, Bonneville Power Administration, the New York Power Authority, Rocky Mountain Institute, various universities, and others have begun to quantify these values and to develop accounting processes. And some utilities are beginning to recognize these benefits, usually within the context of a specific project or design challenge. However, no utility can now fully document the value of distributed energy resources.

     Electric SUN is dedicated to working with the best research available today, applying it in practical and increasingly expansive contexts to reap the greatest possible rewards for our clients and process participants. Yes, this is new territory, but we have the knowledge and experience to guide you through it. The leaders that emerge will hold enormous competitive advantages as the utility industry faces an inevitable global clean-energy transition.

     Through client consulting and through its Learning Organization Electric SUN will facilitate the development of profitable, right-sized solar business strategies. And, where our work finds that some far-reaching strategies may not yet be cost-effective, Electric SUN will provide a clear understanding to utilities and stakeholder alike of the conditions needed to complete a distributed solar resource transition.