NC CLEAN ENERGY TECHNOLOGY CENTER
The State of State Distributed Solar Policy and Markets
In recent years, the cost of residential and commercial customer-sited solar photovoltaics (PV) has declined dramatically, making solar PV technology more available to a much broader base of residential and commercial customers. According to research from Lawrence Berkeley National Laboratory, the median cost of residential solar has decreased from $12/Watt (W) in 1998 to about $4.70/W in 2013. Data obtained from EnergySage shows that in the third quarter (Q3) of 2014, regional residential solar PV costs now range from $3.70/W to $4.24/W (Figure 1).
The dramatic decline in cost of distributed, customer-sited solar PV is largely due to significant reductions in the cost of solar PV hardware. However, the overall value proposition of solar still depends heavily on supportive federal, state, and local policies that guarantee access to the grid, provide compensation for solar electricity generated, as well as policies that reduce hardware as well as “soft” costs (e.g., installation, permitting, inspection, etc.). At present, there are at least five increasingly common types of legislative or regulatory efforts that, if adopted, implemented, or changed, could strongly affect the value proposition of distributed solar:
- Actions related to net energy metering (“net metering”) policies;
- Actions related to utility rate designs that increase fixed cost recovery from all customers (or strictly from solar customers);
- Actions related to official investigations of the “value of solar” or the creation of “value of solar” tariffs;
- Actions related to utilities owning and operating customer-sited solar PV; and
- Actions related to the legality of third-party solar ownership and electricity sales.
The purpose of this report is to provide state lawmakers and regulators, utilities, the solar industry, and other energy stakeholders with timely, accurate, informative, and unbiased quarterly updates on how states are choosing to adopt, implement, change, or abolish policies associated with the valuation and compensation related to customer-sited solar PV.
This quarterly report describes regulatory and legislative activity related to distributed solar PV and electric utility rate design during the fourth quarter (Q4) of 2014 (October 1-December 31). Part I of this report provides context for the issue, a national-level summary of activity during Q4 2014, and a brief description of upcoming action occurring in Q1 2015. Part II summarizes state-specific action that occurred in Q4 2014.
Actions tracked for this report include:
- Changes to state or local net metering policy, which includes aggregate net metering caps, system size limits, virtual and aggregate net metering rules, and compensation rates for net excess generation;
- Utility-initiated rate requests that propose increases in fixed charges that are significantly more than the overall revenue requirement increase requested;
- Utility-initiated rate requests that add demand or fixed charges solely to solar PV or net-metered customers;
- Changes to the legality of third-party solar ownership and electricity sales;
- Legislative or regulatory-led efforts to study the value of distributed solar PV; and
- Regulated utility requests to own and operate residential customer-sited solar PV systems in their service territory.
Generally, this report focuses on actions affecting investor-owned utilities and large municipal utilities. While this report strives to be as comprehensive as possible, the fragmented landscape of electric utility regulation makes a fully comprehensive overview of all relevant action by all utilities time-prohibitive and beyond the scope of this report.
About the NC Clean Energy Technology Center
The N.C. Clean Energy Technology Center advances a sustainable energy economy by educating, demonstrating and providing support for clean energy technologies, practices, and policies.