Welcome back to our Solar Summer series. Big things are happening in solar!
On June 30, Idaho Power released its Value of Distributed Energy Resources (VODER) study which provides the utility’s analysis of the value of solar as well as a few other issues. This study will be used by the utility and the Public Utilities Commission (PUC) to determine the amount and the way that solar owners are paid for their solar production.
What is the value of solar?
When individuals and businesses put solar panels on their rooftops, the solar is first used to power the home or business. Any excess solar is “returned” to the grid and the utility can use it to power other homes or businesses. The value of solar is the price that solar owners are paid for this excess solar. The value of solar determines whether installing solar is a good investment – if the value is too low, individuals will not be able to make up the cost of the panels in a reasonable timeframe.
Previously, Idaho Power compensated solar owners under a net metering scheme. This meant that the value of solar was equal to the going electricity rate and that customers’ energy use and solar production were netted across an entire month. For example, if your home used 900 kWh of electricity in one month and your panels produced 1000 kWh of electricity, you would be credited for 100 kWh of electricity that you could use in future months to offset times when your electricity use exceeded your solar production.
Idaho Power, like many utilities across the country, does not want to continue with the net metering scheme. It argues that the actual value of solar is less than the electricity rate because the electricity rate includes additional values to the utility that are not included in the value of solar. As a result, Idaho Power wants to reduce the value of solar and compensate solar owners at a lower rate for their excess solar – a move that is bad for our environment and our communities
What is the current proceeding?
Back in 2017, Idaho Power initiated a process to change the value of solar. Organizations and individuals spoke up against the low value that Idaho Power proposed and in 2019, Idaho Power was ordered by the PUC to complete a “fair and credible” study of the costs and benefits of customer generated solar. This study was released on June 30, 2022.
Organizations and individuals now have an opportunity to comment on the substance of Idaho Power’s study. After comments are submitted, the PUC will approve or deny Idaho Power’s study. If it is approved, the utility will move to the next phase where it will propose a final value of solar. If the study is denied, the utility will need to redo some or all of the study. This means now is the time to stand up for the value of solar.
How did Idaho Power determine the value of solar?
Idaho Power’s study determined the value of solar by adding up the avoided costs of solar. Avoided costs are costs that the utility and society do not have to pay when solar is used to generate electricity (as opposed to another form of generation, like gas).
Value of solar studies generally examine: 1) Avoided costs of buying fuel for large-scale utility generation (like coal or gas); 2) Avoided costs associated with finding a source of power generation at high-use times; 3) Avoided costs of building new transmission and distribution lines; 4) Avoided costs of power line losses; 5) Avoided costs associated with risk and volatility in energy prices; and 6) Avoided environmental and social costs associated with dirty energy production.
Idaho Power’s study underestimated several of the above avoided costs and it did not include a thorough analysis of either the avoided risk/volatility costs or the avoided environmental and social costs of solar. Both of these shortcomings make their study inaccurate and produce an artificially low value of solar.
What did Idaho Power conclude in this study?
Idaho Power concluded that the value of solar is between 2.7 and 4.0 cents per kWh. The current electricity rate is between 8 and 10 cents per kWh. If Idaho Power’s suggested value of solar is ultimately accepted by the PUC, solar owners would be compensated at a much lower value than what they pay for electricity – making solar less attractive of an investment and spelling trouble for our climate and communities.
The value of solar results of Idaho Power’s study are too low. Idaho Power failed to examine two important avoided costs of solar and its estimates for other avoided costs are low and not in line with estimates from other similar studies. If Idaho Power’s study is accepted by the Commission, customers will have very little incentive to install solar and our clean energy and energy democracy goals in Idaho will be severely threatened.
Join ICL and other solar partners for a webinar on August 10 from 6-7 p.m. to learn more about these issues. We need your help to tell the Commission that Idaho Power’s study is not fair or credible and that it presents an artificially low value of solar that will prevent customers from exercising their right to self generation. Speak up for solar – take action by submitting a comment to the PUC using Case Number IPC-E-22-22, highlighting what’s wrong with Idaho Power’s VODER study:
- The study underestimates several avoided costs of customer-owned solar including avoided generation capacity and avoided transmission and distribution costs
- The study fails to account for the avoided environmental costs of installing more customer generated solar