The Value of Distributed Solar Generation (White Paper)


The Value of Distributed Solar Generation (White Paper) (PDF)


This white paper discusses how the value of distributed PV is being developed and used in the electric utility industry and how it may apply to electric cooperatives. Various components and approaches used to value distributed PV are presented in an effort to help electric cooperatives evaluate and consider how to best advocate, calculate, and negotiate the value of distributed PV for their cooperative for internal or external purposes.

This topic is of particular interest as it relates to VOS tariffs that have been adopted by utilities such as Austin Municipal Utilities (Austin Energy) in Texas and that have been approved for use by the Minnesota Public Utilities Commission (MPUC).  In these cases, the VOS tariff will determine the compensation or credit made by the utility for the solar generation.  In other cases, state commissions are using a VOS approach as a benchmark in determining whether its net metering rule or distributed energy resources (DER) compensation policy results in cost-shifting or subsidization.  To illustrate how VOS is currently being utilized for these two purposes, two case studies are included at the end of this document: one for Xcel Energy, Inc. in Minnesota, and the other for Central Electric Power Cooperative, Inc. in South Carolina.

Whether used to establish a VOS tariff or as an assessment tool for net metering, the general concept and principles of distributed PV value are the same.  Electric cooperatives should be prepared to actively engage in discussions and debates to advocate in the best interest of their cooperative and their consumer-members.  Particular emphasis should be placed on consumer-members, ensuring that all users of the cooperative’s grid pay appropriately for that use.