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Value of Solar Revised Presentation
Denton Municipal Electric Value of solar Study ID 24-1341 September 17, 2024 | City of Denton | Value of Solar 1 Objectives Methodologies Avoided Cost Societal Benefits Policy Driven Incentives Summary of Findings Bill Impacts – Average Residential vs. Solar Staff Recommendation Questions © 2024 NEWGEN STRATEGIES AND SOLUTIONS, LLC 2 2 Value of Solar Methodology Represents energy purchased from a customer that is valued above the Avoided Cost based on the utility’s policies 3 Avoided Cost Findings 4 ERCOT Energy and Ancillary: Value of Solar Rates are paired with Buy-All Sell-All billing and metering setup. ERCOT Energy and Ancillary Avoided Cost assumes that the customer is selling 100% of their power to the Utility in a Buy-All Sell-All setup. Solar PPA: is what DME pays for solar power through purchase power agreements. ERCOT Transmission: is the ERCOT 4CP cost. Generation Capacity: ERCOT does not have a capacity market. DME does not have any future generation planned or approved. There are no costs avoided. Distribution Capacity: Impacts to the distribution system are circuit specific. DME has plenty of capacity on their distribution system. There are no costs avoided. 4 Timing is important Green Line Solar generates the most in the middle of the day. Grey Line Electricity sold back to the grid most often occurs in the middle of the day. Blue Line ERCOT market prices are low in the middle of the day. 5 2023 ERCOT Settlement Prices $/kWh *When Rooftop solar is generating the most, the market price is at it’s lowest. 5 Societal Benefits Findings 6 Proxy Range: $15 to $190 per ton depending on the study. Equivalent to $0.01 to $0.08 per kWh. DME purchases 100% renewable power. The DME cost of carbon is already being mitigated with DME’s power supply strategy of 100% renewables. DG does not offer any additional value in this context. Recommendations: Recommend the Societal Benefit for solar DG for DME be set to $0.00/kWh. City Council may make the policy decision to include societal benefits in the Value of Solar rate. Equivalent to $0.01 to $0.08 per kWh 6 Policy Driven Incentives Findings 7 Federal Policies: Inflation Reduction Act State Policies: Property tax exemption City of Denton’s newly adopted Climate Action Plan encourages more local renewable energy which includes solar options. Recommendations: No requirement for local renewable generation. Recommend the Incentive for solar DG for DME be set to $0.00/kWh. Options to support local renewables, outside of the Value of Solar: Streamline the installation process, permits, and inspections. Waive application or connection fees. Provide grants or rebates to customers. Provide low-cost loans for installation. 7 Summary of Findings 8 Avoided Costs: Range of $0.0379 to $0.0702 per kWh is reasonable. DME’s current Renewable Cost Adjustment (RCA) at $0.0381 per kWh is reasonable. Societal Benefits: Policy Decision for City Council (to incentivize solar DG). Current DME carbon emissions are neutralized by 100% renewable energy. Policy Driven Incentives: Policy Decision for City Council (to incentivize solar DG). Current adopted policies do not require local solar generation. 8 9 Bill Impacts 9 9 Prior Actions PUB July 8th: Step into the $.0379/kWh Value of Solar rate over several years. Transfer annual savings, up to the cap of full phase-in, to Green Sense Incentive program. SFAC June 7th: Make Value of Solar rate $0.05405/kWh Transfer estimated annual savings of $350,364 to GreenSense Incentives program. Wanted further discussion to take place regarding Grandfathering. 10 10 Staff Recommendations Recommendations: Implementing the Avoided Cost Method based on DME Solar PPAs rate of $0.0379/kWh effective 10/1/2024. Transfer estimated annual savings of $463,069 to GreenSense Incentives program. GreenSense budget will increase from $1 million to $1.46 million. 11 11 Questions? Jill Schuepbach, Principal (720) 924-7134 jschuepbach@newgenstrategies.net 12