Design Choices and Equity Implications of Community Shared Solar

Transcription

1 Design Choices and Equity Implications of Community Shared Solar Gabe Chan, University of Minnesota Project Team: Matt Grimley, Ben Ihde, Isaac Evans, Poulomi Mazumder, Elizabeth Arnold, Jacob Herbers, Maureen Hoffman, Jordan Morgan, Nick Neuman, Ryan Streitz USAEE/IAEE North American Conference November 12-15, 2017

2 Will energy and environmental policies make the world more or less fair? Will considering fairness make energy and environmental policies more or less effective and politically durable? 2

3 Agenda Distributional impacts of solar deployment The community shared solar model Research methods Preliminary results 3

4 DISTRIBUTIONAL IMPACTS OF SOLAR DEPLOYMENT 4

5 Energy expenditures as a fraction of income: the Energy Burden 5

6 6

7 Fraction of Customers by Income Group CA Residential Solar Adoption vs. Income Distribution Borenstein (2017), JAERE 7

8 Federal energy subsidies are much more regressive than other tax credits Borenstein and Davis (2016), TPE 8

9 Building Equity in Solar Programs Obama s 2016 Clean Energy Savings for All Americans Initiative o Property-Assessed Clean Energy (PACE) o Low Income Housing Energy Assistance Program (LIHEAP) for efficiency and renewables o Solar Training Network o Community Solar Challenge State programs Private sector efforts o Solar City(?) 9

10 COMMUNITY SHARED SOLAR 10

11 Community Shared Solar (CSS) 11

12 CSS Policy Diffusion Source: Stanton, NRRI

13 SEPA (2015) 13

14 ILSR (2017) 14

15 ILSR (2017) 15

16 16

17 Opening Up the Solar Market? NREL (2014) 17

18 CSS Design Elements Ownership Model 18

19 CSS Ownership Models 19

20 CSS Design Elements Ownership Model Subscription Model o Pay up front; leasing o Pay as you go; bill crediting System and site selection o Project design; investment partners o Rate design Enrollment and outreach Program management 20

21 Opportunities Scale economies Could open up access to finance (flexible ownership) Eased siting constraints; siting opportunities Eased participation constraints: no building ownership, roof space, maintenance, etc. Challenges Requires greater institutional support, coordination Increased financing requirements (scale) Pushes 3 rd -party owned DER challenges further Participation constraints may be too low: no community Other Considerations How distributed? Who participates? Who pays?

22 Key Uncertainties CSS programs are designed to lower barriers: o Scale lowers cost o No requirement for on-site deployment o No requirement for ownership o Alternative source of finance can compensate participants based on economics Solar remains a capital-intensive investment o Will community solar programs replicate the distributional impacts of rooftop solar? 22

23 METHODS 23

24 Analytic Approach State Program Design o How have different states addressed the distributional impacts of CSS programs? o Comparative case studies of 6 mandated state programs: focus on MN Xcel s program (165 MW) MN Utility Program Evaluation o How do different utility program design options affect costs and access to subscribers? o Financial analysis of ~50 CSS programs in MN 24

25 PRELIMINARY RESULTS: STATE MANDATED PROGRAMS 25

26 State Program Design States are deploying a variety of policies to increase access to low/moderate income (LMI) households: o LMI carveouts/mandates o Financial incentives (tariff adders ) o Grant funding and loans for specific projects What is working? 26

27 LMI Programs Size State Program Design CSS Capacity (MW) CSS Planned Capacity (MW) California (PG&E, SDG&E, SCE) Colorado (Xcel, Black Hills) Maryland (CSEGS Pilot) Massachusetts (NRG) Minnesota (Xcel) New York (NY-SUN) > Carve Out 20% for "most disadvantaged"; 10% for MASH 5% carve-out 10% carve-out; 30% to projects in LMI areas Carve-outs in Phase I, then removed Tariff Adder Under consideration SREC-II and SREC transfer Under consideration -- Grant Funding CSI: 10% directed to LMI until 2021 $1.2 mil to GRID Alternatives Special Fund MA Solar Loan Program -- LMI CSS eligible for several large grants ($1.2 bil) Other Strategies Subscription goals, certification, capacity limits 0-down financing -- Anchor offtakers Anchor subscribers (Minneapolis) -- 27

28 State Program Design: Key Takeaways Carve-outs may not improve equity o CO program s carve-out remains under-subscribed o Even at 0-cost, LMI subscriptions have been low Favorable tariffs crowd-out residential participation o MN program s favorable tariff has created large supply, but limited residential participation Risk drives subscriber screening by 3 rd party developers o Where 3 rd parties develop CSS projects, credit screens and long contracts favor stable customers Grant funding has attracted LMI participation but doesn t scale 28

29 The Community in Community Solar? Minnesota s Xcel CSS program has many restrictions to localize benefits but no direct residential requirements: o Minimum 5 subscribers o No subscriber with >40% of output or a subscription more than 120% of past consumption o Gardens up to 1 MW (disputed interpretation) Are these efforts working? 29

30 Distributional Impacts Remain Skewed

31 PRELIMINARY RESULTS: MN CSS PROGRAMS 31

32 Who Offers Community Solar in Minnesota? Co-Ops: Municipal Utilities: Moorhead Public Service Investor Owned Utilities Minnesota Power (Allete) Xcel Energy Arrowhead Beltrami Connexus Cooperative L&P Crow Wing Itasca Kandiyohi Lake Region McLeod Meeker People s Energy Redwood Runestone South Central Stearns Steele-Waseca Tri-County Wright-Hennepin

33 Number of CSS Contracts MN Utility Program Evaluation Subscription NPV ($/W) PAYG PUF/LL 33

34 Preliminary Findings In almost all programs, CSS subscriptions are costly o Average NPV = $7.84 / W, or about $507 for a typical subscription o Pay-as-you-go models increase costs by $0.52 / W in NPV (about 6.6%) Pay-as-you-go theoretically lowers barriers to entry for liquidity constrained customers o But CSS subscriptions do not lower electric bills In the state s largest program, NPV is positive: o $3.21 / W (paid to subscribers), $ over 20 years o But residential participation has been very low overall 34

35 Next Steps Evaluate LMI-targeted programs as state programs roll out o Explore other, experimental policy design options Explore the potential of 3 rd party intermediaries to open up CSS subscription markets Tie policy design measures to more immediate outcome metrics o Subscriptions by income group o Subscription benefits 35

36 Thank You!

37 What does community solar look like in MN? Fills the divide between rooftop (0-100kW) and utilityscale solar (50-100MW) Currently contributes 24% of solar power in Minnesota, with tens of MW coming online each month First 1MW panel of community solar went online in December, 2016