Okay, a break in coverage of China's smog problems for a quick pivot to the value of solar. I want to point you to a solid Q&A with Karl Rábago, former Deputy Assistant Secretary at the Department of Energy and most recently an executive at Austin Energy (where he was my boss), in which he discusses the public process for setting value of solar tariffs. Karl talks specifically about Minnesota, but the lesson is relevant elsewhere in the country.
Here are a couple of highlights from Dan Haugen's piece at Midwest Energy News:
And then finally, remember what we’re doing with distributed solar. We’re inviting a whole new class of people, who have only previously been relatively passive consumers of electric service, to be much more actively engaged, to become generators, in a sense. Look around this country. You don’t get the public to engage in stuff where they don’t know what the consequences are, especially when electric service comes reliable, affordably, and the only thing they ever have to do is sign up for service, maybe pay a deposit, and then pay their bills on time.
If this is going to work, customers and the small businesses that serve them are going to engage in an exciting and fundamental transformation in the way utilities service them, and that has to start from a position of high information. The economists will tell you that the most successful markets are those that have high information.
And this super important nugget about compensation:
The best obviously is that utilities find this is a helpful and desired new option for supporting the deployment of solar, and for, even better, engaging with their customers in a new way, for recasting their relationships with their customers. The big pieces of the value of solar concept that are embodied in this law is that if you fairly compensate customers for the value of the solar energy, you can have a fair conversation about charging customers for the distribution, for the utility services they still use.
That’s really the heart of it. We just want to have fair conversations on both sides. Utilities are entitled to a fair conversation about the services they provide. Solar customers are entitled to a fair conversation about the compensation they deserve for bringing this valuable resource to the system, to society.
This is a tough sell for utilities. There are billions of dollars in capital investments for generation and distribution and utilities are understandably hesitant about throwing solar panels on rooftops and paying people. It disrupts the current business model of selling electricity (in the same way that efficiency works against the core business of a utility).
But it's compelling if you look at the larger social benefit: enabling clean electricity from customers who are now producers and further diversifying and strengthening "the grid" with distributed generation.