Author: Melissa Whited | Ariel Horowitz | Thomas Vitolo | Wendy Ong |Tim Woolf
Organization: Synapse Energy Economics
Report Date: 2017
On April 12, 2017, the Office of the People’s Counsel for the District of Columbia released two groundbreaking studies on the value of rooftop solar to DC residents. The analyses, which are the first to employ the emerging “Value of Solar” (VoS) methodology to assess the full range of costs and benefits associated with using distributed energy generation in Washington DC, came in response to a legislative directive by the DC City Council.
The reports also provide the most sophisticated analysis to date of the technical potential to generate solar electricity with the District’s boundaries, the economics of producing solar in DC, and an assessment of the barriers to bringing the benefits of solar energy to lower-income Washingtonians.
As a well-recognized thought leader on these issues, with a strong knowledge of District solar policies and politics, the People’s Counsel asked the Solar Institute in November 2016 to review draft versions of these reports and provide her with a written assessment discussing the veracity and suitability of the analysis used in the both reports, a comparison of the results with analogous reports conducted in comparable jurisdictions, and an evaluation of the resulting conclusions and their usefulness in District policymaking. The Institute also conducted an in-person briefing with the People’s Counsel and key office staffers to share the results of our review and answer additional questions.
The two reports, “Distributed Solar in the District of Columbia, Policy Options, Potential Value of Solar and Cost-Shifting District of Columbia,” by Synapse Energy Economics, Inc. and “Solar Generation Potential and of Distributed Energy Resources in Low-and Moderate-Income Communities in Washington, DC,” by Jerome S. Paige & Associates, LLC contained a number of notable findings. First and foremost, the VoS analysis found that the societal total value for DC rooftop solar is 19.4 cents per kilowatt (between 2017–2040 and levelized with a 3 percent discount rate), considerably higher than the current retail price for electricity that solar system owners receive for selling their excess electricity to the grid. The Synapse analysis also found that solar could up to 20 percent of the District’s power demands and that solar installations will top 200 MW over the next decade. However, a number of regulatory, financing, and educational hurdles remain, particularly in serving lower-income District communities.
- Generating electricity from this sunlight could contribute to meeting up to 20 percent of the District’s power demands of local homes and business
- Solar generation is the least cost option to produce local energy compared with the cost of purchasing electricity generated from other energy sources.
- The District needs to remove existing barriers in order to achieve its goal of 5 percent of all electricity coming from sites in the District solar by 2032, equivalent to reaching 550 MW solar capacity.
- Significant financial incentives are generally available to customers wishing to install distributed generation, however, both SREC prices and program incentives can vary from year-to-year, creating uncertainty regarding payback periods for solar investments.
- The Value of Solar analysis found that the utility system total value of solar is $132.66/MWh (2015$) and the societal total value is $194.40/MWh (2015$) (both calculations for 2017–2040 and levelized with a 3 percent discount rate).
- The District has a maximum solar generation potential of 1700GWh (gigawatt), primarily from large multi-family-buildings, government, commercial and industrial buildings, although small residential rooftops accounting for 21 percent of the District’s technical solar potential.
- Over a 25-year study period, at current distributed solar penetration levels, the typical residential non-solar customer in the District would experience an additional cost of $0.28 per year on average due to distributed solar.
- In 2016, the cost for a 4-kilowatt (kW) system was approximately $13,000. Even leasing arrangements through third parties generally require minimum credit scores or debt-to-income ratios, which can exclude many low-income customers.