by Lucas Finco, Contributor
State energy policymakers can achieve their economic and environmental goals only from carefully designed solar mandates.
A recent decision by The California Energy Commission to mandate solar panels on all new residential homes might seem like a good idea at first glance. However, digging deeper into the issues surrounding distributed renewables reveals that this mandate might not be the best idea for California state ratepayers. Other states considering similar mandates may want to take some time to consider alternatives that will increase the impact of their policies, while reducing costs to ratepayers.
Let’s take a look at what typical solar production looks like compared to what typical electricity consumption curves look like for typical building types.
Most solar output is in the middle of the day and most residences have low loads during the middle of the day. Below is a plot of typical daily residential energy consumption and solar output taken from doe’s OpenEI system and NREL’s PVWatts calculator. Note that most residences have peak loads in the morning and the evening, while solar peaks in the middle of the day.
We use the Pearson Correlation metric to show how similar the two curves are. That metric varies between -1 and 1, with 0 being no correlation at all, -1 being anti-correlated, and 1 being perfectly correlated. Residential solar and residential consumption has a correlation of -0.06, a correlation so low, they are slightly anti-correlated!
This miss-match creates a challenge for what to do with the energy created by residential solar panels. There are two options:
- Store the energy locally in distributed energy storage or centrally with utility energy storage.
- Distribute the energy through the distribution system to another building that has high loads in the middle of the day.
Both options carry costs to the energy consumer. Either the residence must purchase energy storage at a high cost, or they must pay to maintain a distribution grid. So how will California ratepayers be saving $1.7 billion with this mandate?
An obvious response would be: Why don’t we mandate solar panels on buildings that have high loads in the middle of the day? This would eliminate the need for energy storage and reduce loads on the distribution grid during mid-day time periods, as the energy would be consumed in the same facility it was created. Isn’t this the point of distributed generation in the first place?
What are facilities that have a high correlation with solar output? Below is a list of facilities that have high correlation factors with solar energy production.
Below is a plot of the load of a Stand-alone Retail building with typical solar production. Note here that the curves are highly correlated, with a Pearson correlation of 0.66.
Based on this data, it would make more sense for state regulators and policymakers to introduce mandates for these building types to install solar panels. Much more so than residential buildings, these buildings can consume the energy created at the time it is created, capturing the billions of dollars of savings that the regulators claimed in their analysis.
solIt is important that regulators and policymakers work closely with industry experts and analysts to make sound policies that will actually capture the savings they claim. A more complex, distributed system requires new analysis techniques. This is because the assumptions of the old, central, dispatchable production –> transmission –> distribution model are no longer valid in our changing electric grid. Policymakers must begin to take more a detailed look at load profiles before approving new policies.
New Jersey, which is currently considering a similar residential solar mandate, and other states should consider solar mandates for the building types listed above before residential. If solar electricity is consumed where and when it is generated, then distribution losses can be dramatically reduced and unnecessary spending on distribution grid equipment can be eliminated. This in turn reduces costs for ratepayers and increases renewable energy penetration rates, helping states reach their renewable energy goals.
Author Lucas Finco is a principal consultant at StrateGain where he leveres data and analysis to facilitate the emergence of a clean, affordable, reliable, and resilient energy system.