Maximizing the Benefits of Distributed Photovoltaics

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Maximizing the Benefits ofDistributed Photovoltaics

Distributed photovoltaics can present benefits and costselectric power systems. These effects can be challengingquantify, though thoughtful applications of distributePV can maximize benefits and minimize costs. Severaregulatory changes can encourage such applications.

Anderson Hoke and Paul Komor

I. Introduction

Costs for photovoltaic (PV)

systems have dropped sharply in

recent years.1 These cost drops

have sharpened attention on the

many incentives offered for PV

systems, and on the vexing

question of determining the value

of distributed PV to electric power

systems (EPS). The costs and

benefits of a PV system depend on

a variety of factors, many of which

utilities and regulators can control

or influence. These include the

geographic location of the system,

the placement of the system on the

electrical distribution system,

certain characteristics of the local

electrical characteristics of the

system itself. Several existing

studies have discussed the cos

and benefits of distributed PV,

many open questions remain,

least because of disagreement

among studies on some issues

T his article summarizes th

costs and benefits of

distributed PV as seen by the

electric power system – that i

from the utility or system

operator’s perspective. We th

provide regulatory and system

design principles that encoura

the most beneficial PV system

and discourage the most costl

ones. Implementation of these

principles would please many

Anderson Hoke is a Ph.D.candidate at the University of

Colorado, Boulder, in the PowerElectronics and Renewable Energy

Systems research group. He isresearching microgrid modeling and

control under Dr. DraganMaksimovic. He also works at the

National Renewable EnergyLaboratory, where he helped develop

interconnection testing for V2GPHEVs and is researching effects ofhigh penetration of photovoltaics ondistribution systems. He previously

was lead project manager at BellaEnergy, a PV contracting firm. He

received his A.B. in EngineeringPhysics from Dartmouth College.

Paul Komor is a Director at theRenewable and Sustainable Energy

Institute (RASEI), and teachescourses on energy technology and

policy in the Environmental StudiesDepartment at the University of

Colorado-Boulder. Prior to joiningthe CU-Boulder faculty, he was a

member of the Professional Staff atthe U.S. Congress’ Office of

Technology Assessment (OTA). Heholds a B.S. in Engineering fromCornell University and M.S. and

Ph.D. degrees in Engineering fromStanford University.

An earlier version of this article wasdelivered to the Research and

Emerging Issues Section of theColorado Public Utilities

Commission. The authorsacknowledge the contributions of

Rebecca Lim and Jeffrey Ackermannat the PUC, although any errors are

solely their responsibility.

Please cite this article in press as: A. Hoke,, Maximizing the B

to a

April 2012, Vol. 25, Issue 3 1040-6190/

EPS, and the physical and stakeholders because, relative

enefits of Distributed Photovoltaics, Electr. J. (2012), doi:10.1016/j.tej.

$–see front matter # 2012 Elsevier Inc. All r

2012.03.005

ights reserved., doi:/10.1016/j.tej.2012.03.005 1

http://dx.doi.org/10.1016/j.tej.2012.03.005


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2 104

re environment where PV is

alled without targeting the best

system attributes and

tions:

Electric utilities would

ntially see reduced costs and

roved EPS characteristics.

Ratepayers would

ntially benefit from reduced

tric rates and improved

reliability.

The PV industry should

an improved market for its

uct.

The general public should

fit from reduced

ironmental impacts.

Benefits oftributed PV

istributed PV benefits can be

ded into existing benefits,

ch are currently achievable

existing technologies, and

rging benefits, which make

of new and emerging

nologies. Here we summarize

.

. Existing benefits of

stributed PV

Reduced fuel costs

ne of the most seemingly

ightforward benefits of PV is a

ction in utility fuel costs.

use a PV system produces

er that would otherwise have

e supplied by a conventional

rator, less fuel is necessary to

t load demand. A study by

. Beck, Inc., for Arizona Public

ice identifies fuel savings as

of distributed renewables, valuing

it at up to 8 cents per kWh.2

However, a study by Navigant

Consulting for the Nevada utility,

NV Energy, expressed uncertainty

about fuel cost reductions, stating

that distributed generation (DG)

may or may not produce fuel

savings due to operation of

conventional generators at less

than optimal efficiency.3 While it is

true that the variable nature of PV

can lead to non-optimal operation

of other power sources, such

effects are on the order of a few

percent,4,5,6 i.e., not enough to

greatly counteract the fuel savings.

Reduced fuel costs are the largest

benefit of PV in dollars per kWh.

2. Reduced operations and

maintenance costs

Along with the reduction in fuel

costs comes a reduction in power

plant operations and maintenance

costs. Because runtime of some

conventional generators is

reduced with sufficient PV

penetration, operations and

maintenance costs are reduced.7

This effect is not as large as might

sub-optimal output levels due to

PV variability increases

maintenance requirements,8 but it

is measurable.

3. Reduced line losses

Line losses in transmission and

distribution take up a small but

significant portion of the electricity

generated by centralized power

sources. When electricity is

produced close to the point of use

as with distributed generation,

line losses are reduced or

eliminated.9 A study by the U.S.

Department of Energy (DOE)

estimated that line losses typically

represent 5–8 percent of the total

electricity produced.10 The

Navigant study concedes that

distribution losses are generally

decreased by distributed PV, but

also points out that at certain times

on certain feeders, line losses may

actually be increased by

distributed generation.11 The

situation Navigant refers

referred to is worst on long feeders

at times of light load. This situation

is rare and occurrences can be

minimized by thoughtful

placement of PV.

I t is worth noting that line

losses as a percentage of

electricity generated increase with

load, so losses are greatest during

peak load. The marginal losses

during peak load can be up to 20

percent of load, or up to four

times higher than average line

losses.12 Line loss reductions are

greater to the extent that PV

power coincides with load power

peaks.

educed line losses make up

A study statedthat distributed

generation may or maynot produce fuel savings

due to operation ofconventional generators

at less than optimalefficiency.

single most beneficial impact be expected because operation at R

ite this article in press as: A. Hoke,, Maximizing the Benefits of Distrib

0-6190/$–see front matter # 2012 Elsevier I

a relatively small but

uted Photovoltaics, Electr. J. (2012), doi:10.1016/j.tej.2012.03.005

nc. All rights reserved., doi:/10.1016/j.tej.2012.03.005 The Electricity Journal



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measureable portion of the total

benefit of PV to the power system.

4. Reduced purchased-power

costs

The electricity produced by

distributed PV can also result in

a reduction in power purchased

by the utility from other

suppliers.13 This is especially

true because PV production

occurs during the daytime, when

loads are generally higher and

purchase of power from outside

suppliers is more common. The

value of reductions in purchased

power depends on the specifics

of the utility system and the

extent to which PV production

occurs at times when power

would have otherwise been

purchased. The value of this

benefit is likely to be small for

most systems but could be large

for utilities that purchase a lot of

electricity externally.

5. Generation and

transmission investment

deferral

At sufficiently high

penetrations and with a

sufficiently long planning

outlook, distributed energy can

allow deferral of generation and

transmission (G&T) investment.

Deferral of large capital costs has

significant economic value

associated with the time-value of

the capital saved. In order for

this benefit to be realized,

distributed generation must be

incorporated into the grid

operator’s planning process.14

R.W. Beck placed the value of

zero to 2.35 cents per kWh on the

APS system, depending on PV

penetration level and planning

time horizon, with larger PV

penetrations and longer time

horizons resulting in larger

benefits.15 The benefit became

non-zero above roughly 2 MW of

PV capacity,16 which represents

roughly 0.03 percent of APS peak

load.17 A case study in California

put the value of transmission

deferral for a specific PV project

at 10–30 percent (depending on

time horizon and discount rate)

of the PV installed cost.18

6. Distribution investment

deferral

Distributed PV can also allow

deferral of distribution system

investment. Again, distributed

generation must be integrated into

the grid operator’s planning

process to capture this benefit.19

This benefit is only captured by

careful selection of overloaded

feeders, and significant localized

PV penetrations are required on

those feeders. A California study

found that despite relatively high

significant distribution investm

deferral had been achieved; th

study notes that the PV system

California were not targeted a

constrained areas of the grid.20

potential economic value of

distribution investment deferr

was calculated to range from 0

0.31 cents per kWh on the APS

system, and it begins to be no

zero at extremely small system

level PV penetrations as long as

PV is concentrated on appropr

feeders.21

7. Reduced land use and rig

of-way issues

Siting of distribution and

especially transmission lines c

involve significant degradation

natural lands and can incur str

opposition from affected

landowners. These issues

introduce costs that can vary fr

relatively small to large enoug

stop projects altogether.

Distributed generation can be

tool to avoid these potentially

costly headaches.22 This benefi

very case-specific and difficult

quantify in advance.

8. Capacity value

The capacity value of PV

systems is low compared to

conventional generators due to

intermittency and imperfect

alignment with peak load, but

does have some capacity value

least one author has stated

qualitatively that intermittent

electricity resources actually h

no capacity value,23 but severa

quantitative analyses have sho

that PV does have some capac

In order forcapital costdeferral to berealized, distributedgeneration mustbe incorporated intothe grid operator’splanning process.

es a
this benefit at anywhere from statewide PV penetration, no

April 2012, Vol. 25, Issue 3 1040-6190/

value. The R.W. Beck study cit

enefits of Distributed Photovoltaics, Electr. J. (2012), doi:10.1016/j.tej.2012.03.005

$–see front matter # 2012 Elsevier Inc. All rights reserved., doi:/10.1016/j.tej.2012.03.005 3



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4 104

cal summer day during which

nominal MW of PV produces

a 253 MW reduction in peak

because the load peaks in the

ing when PV production is

.24 However, cloudy days

ce the availability of the PV,

her reducing capacity value. A

y by the Chinese Electric

er Research Institute put the

city value of PV at just 2

ent in one province.25 A

adian study found predicted

capacity values of around 40

ent in Toronto due to a strong

cidence between peak PV

uction time and peak load.26

ce it is clear that the capacity

e of PV is highly location-

ific (and likely highly

endent upon measurement

hodology). PV capacity value

so dependent on geographic

rsity and PV system details.27

instance, in locations with late

rnoon or early evening load

s, PV capacity value is greater

est- or southwest-facing

ems and for single-axis

king systems. The capacity

e of PV is also enhanced by

raphic diversity of PV

ems. Many distributed PV

ems spread over a large area

expected to have greater

city value than a small

ber of utility-scale PV systems

his reason.

Differential time-value of

ergy

et-metered PV systems

uce electricity during the day

n marginal electricity costs are

tively high. Any electricity

customers who own PV systems

has relatively low marginal cost.

Therefore net-metered customers

are providing high value

electricity to the grid and often

receiving low-value electricity in

return. Viewed from a grid

operator’s perspective, PV largely

displaces relatively costly

peaking-plant electricity, while

electricity purchased by PV

owners when their systems are not

producing is largely produced by

baseload plants with lower

marginal electricity costs.

However, this benefit is offset to

some extent because these PV

owners are essentially using the

grid as electricity storage for a

small fee.

A study in New York used

location-based marginal

energy pricing (LBMP)28 to

compare the value of electricity

produced by PV systems to the

average LBMP value. It found that

for south-facing PV systems, the

LBMP value of PV electricity

exceeded the average LBMP value

by 0.5 to 2.6 cents per kWh.

The value differential for

higher, reaching as much as 3.2

cents per kWh.29 LBMP values

were not given for electricity

taken from the grid by net

metered customers when PV was

not producing, but they would

presumably be lower than

average, leading to an even higher

price differential.

S imilarly, a California study

found that the time-value of

PV electricity increased its value

by 30–50 percent when costs to

produce conventional electricity

at various times of day were

accounted for.30

10. Reduced electricity demand

From the perspective of

conventional power generators,

distributed PV acts as a negative

load, reducing demand for

electricity. Economics of supply

and demand dictate that a

reduction in demand leads to a

reduction in average price. This

effect has been measured in

deregulated markets; in New

York State, a study put the value

of this price reduction at $424 per

kW per year.31 The value of this

effect is expected to vary

depending on market structure,

but some effect may still be

present in non-competitive

markets, although measurement

would be difficult without

explicit price signals.

11. Multiplication of demand

response effectiveness

There can be a strong synergy

between PV and load control

methods such as demand response

(DR). Demand response

A California study foundthat the time-value of PV

electricity increased itsvalue by 30–50 percent

when costs to produceconventional electricityat various times of day

were accounted for.

during the night by southwest-facing PV was even u



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some number of hours or kWh per

unit of time (e.g., day, month). By

reducing load during peak times,

PV can free up limited DR

resources for use at other times,

e.g., early evening. This greatly

increases the peak load

displacement capacity of DR, as

measured in a multiyear New

York study. The study estimated

the amount of DR capacity

required to firmly displace a given

amount of peak load in various

locations and found that required

DR capacity was three to 18 times

higher without PV than with PV.

The effect was even more

pronounced if the PV was

southwest-facing, achieving a

DR effectiveness multiplication of

six to 27 times.32 This benefit

would of course not be seen by a

utility with small or negligible

amounts of DR. While the ability of

PV to increase the peak-shaving

capability of DR appears quite

large, the magnitude of the effect

varies widely.

12. Price stability/

predictability

While the levelized price per

kWh of distributed PV is

significantly higher than the prices

of electricity from other sources,33

the future prices of coal- and gas-

fired generation are subject to large

uncertainties. Prices of natural gas

have demonstrated particular

volatility, and while presently low,

are expected to increase.34 Coal

prices are historically more stable

andlowerthannaturalgasprices,35

but are expectedto increaseaswell.

In addition, the possibility of

regulation, while not likely in the

current political and economic

climate, cannot be discounted,

especially over the 30-year life of

PV systems and with the effects of

climate change increasingly

observable. Hence, distributed PV

represents a hedge against future

fuel price increases. Objective

estimates of the value of this hedge

are difficult to come by given the

need to forecast future events.

B. Emerging benefits of

distributed PV

1. Voltage regulation

Grid-tied PV systems currently

are required to produce only real

power in most applications.36

However, they are equally capable

of producing reactive power

(VARs).37 This capability is proven

and reliable. Future regulations

are expected to allow it, and

perhaps even require it in certain

applications. Indeed, inverters are

already allowed to provide VAR

support in utility-owned systems

of greater than 250 kW capacity.38

professionals may not be awar

that sourcing or sinking reacti

power often does not require

reduction in real power

output.39,40

T he provision of distribut

reactive power can bene

the EPS in several ways:

� Inverters can provide

dynamic voltage regulation,41

improving power quality by

reducing voltage flicker. Flicke

sometimes cited as a problem

associated with distributed PV

Advanced inverters not only so

the problem but can improve

power quality beyond the leve

present without distributed PV

� Inverter-based steady-stat

voltage regulation also takes a

problem sometimes associated

with high PV penetration42 an

improves it beyond the pre-PV

level. This function can be

dispatched by the utility on

demand, or it can operate

automatically based on pre-

defined voltage setpoints,

eliminating the need for

communication.43

� Inverter-based volt-VAR

control has greater granularity

flexibility than switching

capacitors or adjusting

transformer taps.

� Providing reactive power

locally further reduces line los

Lines losses due to reactive po

are often much greater than los

due to real power.44

The first U.S. installation of

inverters providing VAR supp

was commissioned in 2010.45 O

major U.S. inverter manufactu

reports that in mid-2012 all ne

Many electricityindustry professionalsmay not be awarethat sourcingor sinking reactivepower often does notrequire a reduction inreal power output.

ude
carbon dioxide emissions Many electric industry

April 2012, Vol. 25, Issue 3 1040-6190/

inverters over 250 kW will incl


$–see front matter # 2012 Elsevier Inc. All rights reserved., doi:/10.1016/j.tej.2012.03.005 5



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6 104

support as a standard

ure.46

he value of this service is a

topic that requires further

arch.47 The value is expected

e location-dependent since

ribution feeder voltage

les vary widely, with certain

tions presenting significant

e opportunities.

Other advanced control

chniques

addition to reactive power

rol, inverters available now or

e very near future are expected

corporate other beneficial

rol techniques including

T (discussed below),

uency ride through, power

ailment, and controlled ramp

s.48 The potential benefits of

e techniques vary widely

d on location, grid

acteristics, and PV

etration. However, the cost to

lement these techniques is

imal,49 so there is little

bt that they present a net

fit from the grid operator’s

pective.

. Benefits summary

any benefits of distributed PV

location-specific, and others

technology-specific, so

ortunities exist to maximize

fits through intelligent siting

technology selection. A few

fits are well-quantified but

y require detailed analysis to

rmine value.

able 1 briefly summarizes the

fits of distributed PV to the

rated qualitatively, with a rating of

‘‘large’’ indicating on the order of

magnitude of the wholesale cost of

electricity and ‘‘small’’ indicating

fractions of a cent per kWh. The

various factors on which the value

of the benefit depends are listed,

the specificity of the benefit to

distributed (as opposed to utility-

scale) PV is noted, and some

general methods of maximizing

the benefit (in per kW PV terms)

are listed as well.

III. Costs of DistributedPV

The costs of distributed PV to

the power system are summarized

below, and relative economic

values are presented where

available. The extent to which

there is agreement on the values of

these costs is also commented on.

A. Reduced utility revenue

Distributed PV systems reduce

the amount of electricity sold by

utilities, hence reducing revenue.

offset because utility fuel

consumption is also reduced, but

many non-fuel costs must be

passed on to other customers,

potentially leading to a rise in

rates.50 A study of New York’s EPS

indicates that fuel and related

savings together with capacity

value make up 75 percent of the

lost utility revenue, and that other

benefits are ‘‘likely’’ to make up

the remaining 25 percent.51 Other

authors conclude that the benefits

of PV do not outweigh the reduced

revenue cost,52 albeit using

different methodology.

B. Administrative costs

Integration and management of

distributed PV involves costs

including interconnection

agreement administration, billing,

and other overhead tasks. More

complex billing structures such as

time-of-use electricity pricing can

increase administrative costs.

Administering a larger number of

smaller distributed PV systems is

expected to cost more than

administering a small number of

utility-scale systems. These costs

are expected to be small relative to

other costs.

C. Operating reserve costs

The variable nature of

distributed PV can lead to various

regulation-related costs:

� PV power can ramp up and

down quickly due to clouds

shading solar modules. This

requires that operating reserves be

kept available to pick up the load.

his
. Each benefit’s relative value is T


revenue reduction is largely A second Navigant study (also






Please cite this article in press as: A. Hoke,, Maximizing the Benefits of Distributed Photovoltaics, Electr. J. (2012), doi:10.1016/j.tej.2012.03.005

Table 1: Benefits of Distributed PV

Benefit

Relative

Value Depends on:

Specific to

Distributed PV? How to Maximize

Reduced fuel costs Large Fuel mix vs. time

Generator efficiency curve

No TOU metering

Target late p.m. PV

Reduced operations

and maintenance costs

Small Fuel mix vs. time

Generator efficiency curve

No TOU metering

Target late p.m. PV

Reduced line losses Small to

moderate

T&D system details

PV locations

PV technology

Yes TOU metering

Target late p.m. PV

Target PV locations

Target inverter-based VARs

Reduced purchased-power costs Varies Coincidence of

purchased-power

with PV production

No Unknown

G&T investment deferral Zero to

moderate

PV penetration

Planning time horizon

G&T system details

No for gen.

Yes for trans.

Consider PV in

planning/modeling

Distribution investment deferral Small Distribution system details

PV location

PV coincidence with load

Yes Consider PV in planning/

modeling

Target PV locations

Reduced land use and

right-of-way issues

Varies Details of land use or

right-of-way issues

PV location

Yes Consider PV in

planning/modeling

Target PV locations

Capacity value Varies PV coincidence with load

PV geographic diversity

No, but dist.

PV has greater

value per kW

TOU metering

Target late p.m. PV

Target PV locations

Differential time-value

of energy

Small to

moderate

LBMP of PV energy vs.

LBMP of energy

imported by PV owners

Yes Net metering (w/o TOU)

Target late p.m. PV

Target PV technologies

Reduced energy demand Small PV penetration No Unknown

Multiplication of DR/DSM

effectiveness

Varies PV location

Incorporation of PV and

DSM into IOU

planning/modeling

No TOU metering

Consider PV/DSM synergy

in planning/modeling

Price stability Small Future coal and gas prices No Encourage PV in general

Voltage regulation Small to

moderate

Adoption of emerging

technology

PV location

No, but dist.

PV VARs have

greater value

Consider inverter-based

VARs in planning/modeling

Target PV locations

Other advanced inverter

control

Small to

moderate

Adoption of emerging

technology

PV location

Depends on

technology

Follow emerging trends

and incorporate them

into planning/modeling

April 2012, Vol. 25, Issue 3 1040-6190/$–see front matter # 2012 Elsevier Inc. All rights reserved., doi:/10.1016/j.tej.2012.03.005 7



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8 104

ormed for NV Energy)

tifies costs of 0.3 to 0.7 cents

kWh due to increased heat

s (inefficiencies) of operating

rve generators needed to meet

ramp rates.53 However, this

y included large amounts of

ty-scale PV in addition to

ributed PV, so these costs

ld be lower if only distributed

were considered.

ertheless, this is expected to be

largest cost associated with

gration of distributed PV into

power grid.

PV power can also drop

kly when inverters trip

ne for various reasons. The

p rates associated with

rters tripping are larger than

e associated with cloud

ement. Tripping of

vidual inverters is not as

lematic as tripping of many

rters simultaneously, as can

r when grid voltage or

uency goes outside of

ired ranges. Inverter

-voltage ride-through

RT) capability can mitigate

worst cases of this – this

tionality is already required

ermany and ‘‘will be adopted

.S. sites in 2011’’.54 PV

ut ramps due to inverter

ping are far less common than

ps due to changes in

diance, but they must be

ned for.55

osts due to PV variability

can be mitigated by

raphic diversity. Ramp rates

iminished by distributing PV

a large area and even by

egation of multiple inverters56

Variability-induced costs have

not been well-quantified; they are

certainly non-negligible but are

not prohibitive even for very large

PV penetrations.57

D. Power quality costs

Distributed PV systems can

reduce power quality by

introducing transient effects such

as voltage flicker largely due to

their variable output. The

economic effect of this cost is likely

to be small, and it can be mitigated

by PV inverters performing active

voltage control as described above.

A 2011 report states that one of the

key steps utilities should take to

prepare for higher penetration of

PV is to upgrade ‘‘reactive power

capabilities.’’58 More timely advice

would be to encourage use of

inverters that provide their own

reactive power.

E. PV curtailment costs

Just as wind power is

occasionally curtailed at times of

high wind and low load, it is

need to be curtailed given very

high PV penetrations. This should

be less problematic for PV than

wind because PV is more

predictable and correlates better

with load.59,60 The Navigant study

of both utility-scale and

distributed PV found curtailment

costs of zero to 0.05 cents per

kWh.61

F. Distribution equipment

upgrades

It has also been proposed that

distributed PV may cause utilities

to need to upgrade equipment

including distribution lines and

protection equipment. The

Navigant distributed PV study

concluded that these costs are

small or negligible on NV Energy’s

system.

IV. Summary

Distributed PV presents several

costs to the power grid. Of the

costs that can be mitigated by

targeting of PV installations, the

most significant is that associated

with the operating reserves

needed to accommodate PV ramp

rates.

E stimating the costs and

benefits of PV is made more

difficult because most researchers

studying the issue have strong

opinions on the subject. Many

studies are performed by or on

behalf of PV industry

organizations, such that a clear

economic incentive exists to

emphasize benefits at the expense

oss
in a single PV installation. p


ible that PV power would of costs. At the same time, among





n

d

uth

to

t


tems

ling

ling

researchers associated with the

utility industry a lack of

familiarity with distributed

generation has led to ‘‘the

perception of added risks and

uncertainties, particularly when

DG is compared to conventional

energy solutions.’’62 These

biasing effects are present even

when researchers consciously

strive for objectivity and can be

diminished only though rigorous

analysis.

Table 2 briefly summarizes the

costs described above. The relative

value of each cost is rated

qualitatively, with ‘‘large’’

indicating on the order of

magnitude of the wholesale

electricity cost and ‘‘small’’

indicating fractions of a cent per

kWh. Parameters on which each

cost depends, specificity of the cost

to distributed PV, and potential

regulatory actions to minimize the

cost are also listed.

V. Tools to MaximizeNet Benefits

Many of the costs and

benefits identified above vary

based on PV system

characteristics, geographic

location, and placement of

the PV system within the

EPS. Hence it should be

possible to maximize benefits

and minimize costs by choosing

the best PV system types

and placing them in the best

locations. This section describes

tools that could be used to

encourage the most beneficial PV

systems.

A. Encourage better

alignment of PV with load

Several of the benefits

mentioned in Section II are

maximized when PV power

output coincides with load.

For much of the U.S., peak

loads occur in the late afternoo

and early evening during

summer. Improved PV-load

alignment can be accomplishe

in two ways,63 both of which

increase PV production late in

the day:

� Adjust PV system azim

towards the southwest or the

west. Any incentive designed

encourage west and southwes

azimuths would have to be

large enough to overcome the

existing economic incentive to

face PV systems south. For

Table 2: Costs of Distributed PV

Cost

Relative

Value Depends on:

Specific to

Distributed PV? How to Minimize

Reduced utility revenue Large PV penetration No Target most beneficial PV sys

Administrative costs Small Number of systems

Integration of PV

into utility processes

No, but higher

for distributed PV

Encourage integration of PV

into utility processes

Operating reserve costs Moderate PV penetration

EPS details

Coincidence of PV

with load Integration

of PV into dispatch

No TOU metering

Target PV locations

Target late afternoon

PV production

Power quality costs Small PV penetration

PV technology

No, but higher

for distributed PV

Follow emerging technologies

and incorporate them into

planning/modeling

PV curtailment costs Negligible

to small

PV penetration

G&T system details

No Consider PV in planning/mode

Distribution

equipment upgrades

Negligible to

small

PV Penetration

Distribution system

details

Yes Consider PV in planning/mode

Target PV locations


PV locations




exam

syst

perc

sout

facin

on l

that

the

alig

outw

prod

�

tech

for i

as e

to p

capi

add

sing

som

rate

Thu

incr

som

Tbe u

facin

trac

cust

met

rate

has

utili

else

pric

in h

elec

time

this

met

by m

the

mar

each

desc


Please c

10 10

ple, a 20- to 30-degree tilted

em produces about 3–5

ent less when facing

hwest than it does when

g southeast, depending

ocation.64 It is expected

from the utility’s perspective

benefits of improved PV-load

nment would typically

eigh the reduced PV

uction.

Use solar tracking

nology. This would allow

ncreased daily output as well

nsure maximum output closer

eak load times. However,

tal costs are higher. In

ition, PV systems on

le-axis trackers experience

ewhat higher power ramp

s than fixed tilt systems.65

s single-axis trackers will

ease reserve requirements

ewhat.

ime-of-use (TOU) and real-

time electricity pricing can

sed to encourage both west-

g PV and single-axis

king, assuming that PV

omers who are currently net-

ered would be paid the TOU

for their PV electricity. This

been implemented by several

ties in California66 and

where. Setting electricity

es high late in the day results

igher payments for PV

tricity produced during

s of peak load. However,

may require more-intelligent

ers than are currently used

any utilities. And assuming

TOU rate is set to reflect

ginal electricity costs at

time of day, the benefit

time-value of energy’’ would be

erased.67

One unusual TOU-type rate

system (actually a real-time

pricing system) has been

implemented by Southern

California Edison in which

the price of electricity during

each hour is linked to the

maximum temperature during

that hour.68 While such a rate

would likely incentivize PV

production that coincides well

with peak air conditioning load, it

is cited here primarily as an

example of a creative rate structure

that might inspire further

creativity.

It may be possible to incentivize

PV systems designed to produce

electricity late in the day by

other means, such as through

rebates. The legality of offering

rebates to specific system

designs would need to be

investigated.

B. Encourage geographic

diversity

As mentioned in Section II, the

with greater geographic

diversity, and the operating

reserve costs mentioned in

Section III decrease with

greater geographic diversity.

In both cases, the improvement

is due to the decrease in

variability seen when PV

systems are spread over a large

area. This effect is well

documented.69 A cap on the

penetration of PV allowed

on a given feeder or in a given

area may reduce clustering, but

this is a fairly blunt tool that

would likely see political

opposition.

A lternatively, utilities could

identify areas where more

PV would be beneficial to the

system and propose methods of

incentivizing PV in those

locations. This however may

run afoul of regulations requiring

all customers within a customer

class be offered the same

incentives.

C. Encourage PV in optimal

locations

Several of the benefits described

in Section II are very location-

specific – benefits may be high on

one feeder or feeder branch and

small or non-existent in other

locations. Indeed, location-

specificity of distributed energy

impact is one of the major trends

identified by the DOE.70

Identifying the best locations for

distributed PV may consume more

time than typical utility planning

and modeling processes,

especially as models are updated

pa
ribed as ‘‘differential ca

40-6190/$–see front matter # 2012 Elsevier

city value of PV increases and processes are adapted.


Inc. All rights reserved., doi:/10.1016/j.tej.2012.03.005 The Electricity Journal



n

hat

the

to

d to

for

the

y

gy

th.

o

uld

nd

h,ing

the

ept.p/

&c

d10.

W.: Is, at

11.

be’ soity


Ongoing research suggests that

suitability for PV varies widely

from one distribution feeder

to another and from location

to location within a feeder.71

Optimal use of distributed

PV will require development

of efficient methods for

detailed analysis of distribution

feeders.

D. Encourage adoption of

advanced inverter

functionality

Several inverter functions that

can increase the benefits and

reduce costs of PV were

identified above. The most

important two functions are

voltage regulation (volt-VAR

control) and low-voltage ride-

through (LVRT). The PUC may

want to consider working with

the appropriate regulatory

bodies to adopt rules that allow

these technologies, as will be

encouraged by new IEEE 1547

rules.72 Federal Energy

Regulatory Commission (FERC)

Rule 661a already requires LVRT

for large-scale generation, so

expansion of this rule to lower

power levels is a reasonable goal.

Once new rules are in place, the

regulators may want to encourage

newly installed inverters to carry

these technologies, perhaps by

requiring them for systems above

a certain size. In addition,

incorporation of these

technologies into the utility

planning processes should help

maximize benefits. For instance,

analysis of inverter-based volt-

voltage regulation equipment

expenditures.

I t will need to be determined

whether distributed PV

system owners should be

compensated for reactive power,

and if so, how much. Prices of

voltage regulation in deregulated

utility markets can serve as

a guide to the value of this

service.

VI. Summary andConclusions

Fortunately, it is not necessary

to answer the difficult question of

whether distributed PV presents a

net cost or a net benefit in order to

implement policies that

encourage the most beneficial PV

systems and discourage the most

costly. Regardless of the answer to

the question of total PV cost/

benefit, a policy environment that

targets the most beneficial PV

systems will improve grid

reliability and decrease utility

costs relative to a policy

environment that ignores this

distributed PV and those who

question its value should be i

favor of a policy environment t

targets the most beneficial PV

systems; those who question

value of PV should be pleased

see its associated costs

minimized, and those who ten

support PV should be pleased

it to become seen as less of a

burden and more of an asset to

EPS.

Distributed PV is a relativel

young technology, but given

recent deployment growth and

cost reductions, it is a technolo

that will continue to show grow

Hence finding optimal ways t

incorporate it into the grid sho

be a priority for both utilities a

their regulators.&

Endnotes:

1. Galen Barbose, Naım DarghoutRyan Wiser and Joachim Seel, Trackthe Sun IV: An Historical Summary ofInstalled Cost of Photovoltaics in theUnited States from 1998 to 2010,Lawrence Berkeley National Lab, S2011, at http://eetd.lbl.gov/ea/emreports/lbnl-5047e.pdf.

2. R.W. Beck, Inc., DistributedRenewable Energy Operating ImpactsValuation Study, for Arizona PubliService, 2009.

3. Navigant Consulting, DistributeGeneration Study, for NV Energy, 20

4. Joseph F. DeCarolis and David

Keith, The Costs of Wind’s VariabilityThere a Threshold? ELEC. J., Dec. 200569–77.

5. Keith Parks, presentation at theUniv. of Colorado, Boulder, Oct. 20

6. Both references relate to windenergy, but both wind and PV cantreated as variable ‘‘negative load,’inefficiency caused by the variabilof either should be similar. In fact

is
VAR control could precede new issue. Hence, both proponents

April 2012, Vol. 25, Issue 3 1040-6190/$

of because current wind penetration


–see front matter # 2012 Elsevier Inc. All rights reserved., doi:/10.1016/j.tej.2012.03.005 11

http://eetd.lbl.gov/ea/emp/reports/lbnl-5047e.pdf

http://eetd.lbl.gov/ea/emp/reports/lbnl-5047e.pdf



genepenemangeneless

wind

7. R

8. N

9. DUtiliEvaluBeneCONF

10. UBeneRate-Their

11. N

12. JValuEfficiLosseReguMon

13. R

14. U10.

15. R

16. I

17. APrepComACC

18. ETranof So

19. U10.

20. SValuEnerEnerCalif

21. R

22. U10.

23. JStanELEC

24. R


Please c

12 10

rally much higher than any PVtration likely to be achieved fory years, the effect of non-optimalrator operation due to PV will bethan or equal to the effect due to

on both a net and per-kWh basis.

.W. Beck, supra note 2.

avigant, supra note 3.

aniel S. Shugar, Photovoltaics in thety Distribution System: Theation of System and Distributed

fits, IEEE PHOTOVOLTAIC SPECIALISTS

ERENCE, Apr. 1990, at 836–843.

.S. Dept. of Energy, The Potentialfits of Distributed Generation andRelated Issues that May Impede Expansion, 2007.

avigant, supra, note 3.

im Lazar and Xavier Baldwin,ing the Contribution of Energyency to Avoided Marginal Lines and Reserve Requirements,latory Assistance Project,tpelier, Vt., 2011.

.W. Beck, supra, note 2.

.S. Dept. of Energy, supra, note


d.

rizona Public Service, APSared to Meet Summer Demand:pany Provides Annual Update to, press release, May 11, 2011.

dward Kahn, Avoidablesmission Cost Is a Substantial Benefitlar PV, ELEC. J., May 2008, at 41–50.


everin Borenstein, The Markete and Cost of Solar Photovoltaicgy Production, Center for Study ofgy Markets – University ofornia Energy Institute, 2008.



ay Morrison, Why We Needdby Rates for On-Site Generation,. J., Aug. 2003, at 74–80.


25. Yuehui Huang, Chun Liu,Guoqing He, Xiaoyan Xu, JingHe, Weisheng Wang and XiaoxinZhou, Capacity Value of PV Generationand Its Impact on Power SystemPlanning: A Case Study in Northwest ofChina, IEEE POWER & ENERGY ENG’G.CONFERENCE, Chengdu, China, Mar.2010.

26. Sophie Pelland and Ihab Abboud,Estimating the Capacity Value and Peak-Shaving Potential of Photovoltaics inOntario: A Case Study for the City ofToronto, 17TH INT’L. PHOTOVOLTAIC SCI. &ENG’G. CONFERENCE, Fukuoka, Japan,Dec. 2007.

27. Steven E. Letendre and RichardPerez, Understanding the Benefits ofDispersed Grid-Connected Photovoltaics:From Avoiding the Next Major Outage toTaming Wholesale Power Markets, ELEC.J., July 2006, at 64–72.

28. LBMP is the wholesale electricityprice administered by the New YorkIndependent System Operator. Itreflects the wholesale price ofelectricity at a specific time in a specificlocation.

29. Dana Hall, James M. VanNostrand and Thomas G. Bourgeois,Capturing the Value of DistributedGeneration for More EffectivePolicymaking, AM. SOLAR ENERGY

SOC., SOLAR 2009, Buffalo, NY, May2009.

30. Borenstein, supra, note 20.

31. New York State Energy Research

Energy $martSM Program: Evaluationand Status Report, New York, 2008.

32. Richard Perez and Thomas E.Hoff, Energy and Capacity Valuation ofPhotovoltaic Power Generation in NewYork, Clean Power Research, Mar.2008.

33. U.S. Energy InformationAdministration, Levelized Cost of NewGeneration Resources in the AnnualEnergy Outlook 2011, at http://205.254.135.24/oiaf/aeo/electricity_generation.html.

34. U.S. Energy InformationAdministration, Annual EnergyOutlook 2011.

35. On a kWh-electric basis.

36. Institute of Electrical and ElectronicEngineers, IEEE 1547: Standard forInterconnecting Distributed Resourceswith Electric Power Systems, 2003.

37. Hirofumi Akagi, YoshihiraKanazawa and Akira Nabae,Instantaneous Reactive PowerCompensators Comprising SwitchingDevices without Energy StorageComponents, IEEE TRANSACTIONS ON

INDUSTRY APPLICATIONS, 1984 at 625–630.

38. John Shaw, 225 kW to 2 MWUtility-Scale Grid-Tied PV Inverters,Solectria Renewables, Inc.presentation, 2011.

39. At times when PV real powerreaches inverter power ratings, limitedcurtailment of PV real power isnecessary to provide reactive power.This generally occurs only a few hoursper year, and can be eliminated byslight oversizing of inverters.

40. Robert Erickson and DraganMaksimovic, FUNDAMENTALS OF POWER

ELECTRONICS, 2nd Ed., 2001.

41. Thomas Stetz, Wei Yan and MartinBraun, Voltage Control in DistributionSystems with High-Level PV-Penetration:Improving Absorption Capacity for PVSystems by Reactive Power Supply,25th European Solar EnergyConference & Exhibition, Valencia,Spain, Sept. 2010.

42. Donal Caples, Sreto Boljevic andMichael Conlon, Impact of DistributedGeneration on Voltage Profile in a 38kV

and Development Authority, New York D


40-6190/$–see front matter # 2012 Elsevier

istribution System, IEEE 8TH INT’L.


Inc. All rights reserved., doi:/10.1016/j.tej.2012.03.005 The Electricity Journal

http://205.254.135.24/oiaf/aeo/electricity_generation.html





theiscle.

seign

romers

r,

1.

10.

r

2.

age


CONFERENCE ON EUROPEAN ENERGY

MARKET, Zagreg, Yugoslavia, May2011, at 532–536.

43. Mukul C. Chandorkar, DeepakrajM. Divan and Rambabu Adapa,Control of Parallel Connected Inverters inStandalone AC Power Systems, IEEETRANSACTIONS ON INDUSTRY APPLICATIONS,Jan. 1993, at 136–143.

44. Michael Zuercher-Martinson,Smart PV Inverter Benefits for Utilities,PHOTOVOLTAICS WORLD, Nov. 2011, at18–21.

45. Id.

46. John Shaw, personalcommunication, Nov. 2011.

47. John Kueck, Brendan Kirby, TomRizy, Fangxing Li and Ndeye Fall,Reactive Power from Distributed Energy,ELEC. J., Dec. 2006, at 27–38.

48. Shaw, supra note 38.

49. Zuercher-Martinson, supra note44.

50. Navigant, supra note 3.

51. Perez, supra note 32.

52. Borenstein, supra note 20.

53. Navigant Consulting, Large-ScalePV Integration Study, for NV Energy,2011.

54. Zuercher-Martinson, supra note 44.

55. Andrew Mills, Mark Ahlstrom,Michael Brower, Abraham Ellis, RayGeorge, Thomas Hoff, BenjaminKroposki, Carl Lenox, Nicholas Miller,Michael Milligan, Joshua Stein andYih-huei Wan, Dark Shadows:Understanding Variability andUncertainty of Photovoltaics forIntegration with the Electric PowerSystem, IEEE POWER & ENERGY

MAGAZINE, May–June 2011, at 33–41.

56. Id.

57. DeCarolis, supra note 4.

58. Accenture, Achieving HighPerformance with Solar Photovoltaic (PV)Integration, 2011.

59. Mathias Fripp and Ryan Wiser,Analyzing the Effects of Temporal WindPatterns on the Value of Wind-GeneratedElectricity at Different Sites in Californiaand the Northwest, Lawrence BerkeleyNational Laboratory, 2006.

60. Borenstein, supra note 20.

61. Navigant, supra note 53.

62. U.S. Dept. of Energy, supra note 10.

63. From a technical perspective athird method, distributed energystorage, is also possible. Distributedbattery systems can store energy when

PV is producing and release it ontogrid during times of peak load. Thoption is not addressed in this arti

64. PVWatts Version 2, NationalRenewable Energy Laboratory, athttp://www.nrel.gov/rredc/pvwatts/grid.html.

65. Mills, supra note 55.

66. Naım Darghouth, Galen Barboand Ryan Wiser, Impact of Rate Desand Net Metering on the Bill Savings fDistributed PV for Residential Customin California, Lawrence BerkeleyNational Laboratory, Apr. 2010.

67. The benefit does not disappeabut rather is transferred from theutility to the PV system owner.

68. David Gomez, Aleo Solar,personal communication, Nov. 201

69. Mills, supra note 55.

70. U.S. Dept. of Energy, supra note

71. Anderson Hoke, Rebecca ButleJoshua Hambrick, and BenjaminKroposki, Maximum PhotovoltaicPenetration Levels on TypicalDistribution Feeders, NationalRenewable Energy Laboratory, 201

72. Currently IEEE 1547 actuallyrequires inverters to trip at low voltdue to islanding concerns.

Several inverter functions that can increase the benefits and reduce costs of PV were identified.



http://www.nrel.gov/rredc/pvwatts/grid.html

http://www.nrel.gov/rredc/pvwatts/grid.html



https://www.researchgate.net/publication/3268532_Effects_of_Temporal_Wind_Patterns_on_the_Value_of_Wind-Generated_Electricity_in_California_and_the_Northwest?el=1_x_8&enrichId=rgreq-ad9765803b45c0f0bb8dad0d51506b23-XXX&enrichSource=Y292ZXJQYWdlOzI1NzQ1NDMyNDtBUzoxMDQ4NjkzMzU2NjY2OThAMTQwMjAxNDIwNjk3NA==








https://www.researchgate.net/publication/241132915_Control_of_parallel_connected_inverters_in_stand-alone_AC_supply_systems?el=1_x_8&enrichId=rgreq-ad9765803b45c0f0bb8dad0d51506b23-XXX&enrichSource=Y292ZXJQYWdlOzI1NzQ1NDMyNDtBUzoxMDQ4NjkzMzU2NjY2OThAMTQwMjAxNDIwNjk3NA==






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Maximizing the Benefits of Distributed Photovoltaics