Calculating the “Value of Solar” in the District of Columbia

Calculating the “Value of Solar” in the District of Columbia

A common question from prospective solar buyers is “how much will I get for the electricity my system produces?” In most places, this is determined by net metering. As the name implies, people who have solar only pay for the ‘net’ electricity they use from the utility. When solar customers’ systems are producing more electricity than their home use, their meters run backwards.

Net metering is easy to measure, but nonetheless crude, metric for measuring the actual value of the solar being generated. In order to develop a more accurate assessment, The Office of the People’s Council (OPC) has hired Synapse Energy Economics to do a study to calculate the value of solar in the District of Columbia. The company recently held a webinar to review the methodology it will use to determine how to calculate such a value. The methodology used in these calculations is important because the inputs used in the study will shape what result it provides.

Synapse defines the Value of Solar (VoS) as the expected net benefit (or cost) that a solar installation provides to society over many years, relative to what would have happened otherwise. Community and customer sited solar are included. Potential benefits and costs to solar generators, all utility customers, the utilities themselves, and society as a whole are included as well.

In the webinar, Synapse describes 14 different metrics it will use to determine how to calculate the value of solar in the District. These metrics can be grouped into two categories: costs of adding solar, and benefits of adding solar. These are listed below.

Costs Benefits
Utility integration and interconnection Avoided energy use costs
Utility administration Avoided transmission losses
Ancillary services Avoided additional transmission capacity
Distribution capacity Avoided additional generation capacity
RPS compliance
Clean Power Plan compliance
Lower energy prices due to demand reduction
Fuel price hedging
Lower power outage rates
Carbon savings

The firm is currently gathering all the data necessary from each of the above categories in order to calculate the value of solar in the District. The firm is in the early stages of its research and is accepting input into its study. You can watch the full webinar here. The webinar is helpful to people who are trying to understand how the value of solar is calculated in net metering battles across the United States. There were more than 27 value of solar fights across the country in 2015. Attacking Net Metering is one of the main strategies that utilities are using to stop the spread of rooftop solar.

What happens next will depend upon what the study says. Perhaps the study shows that solar producers should be paid more than they are currently getting for their solar production. OPC could propose the District replace net metering with a value of solar tariff. On the other hand, if the study shows that solar costs outweigh solar benefits—the utility or OPC could use the study to challenge net metering. In the long-run energy actually has different values depending of what time of day it is and also what location it is being produced. As our energy system gets more and more sophisticated we might see all kinds of new tariffs that encourage solar when and where we need it most. This is a study that all D.C. solar homeowners should watch closely.