Loading...
Value of Solar Revised PresentationDenton 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