U.S. grid-connected PV shines despite cost

Terry Peterson, EPRI

Terry Peterson, EPRI Click here to enlarge image

According to some estimates, there is more than 1 gigawatt of photovoltaic (PV) power currently operating in the world, with over 350 MW added in the past year. Much of that power is being used—as it has been for decades—as a distributed generation resource independent of the power grid. It is deployed near its point of use, often at remote locations that are too difficult or expensive to serve with grid power.

However, widespread adoption of PV in the developed world will involve grid connection, where PV backs up or supplements standard grid power. In recent years, grid-connected PV applications, in fact, have been growing far faster than the off-grid market. Today some industry observers estimate that grid-connected PV represents about half of current sales. While the off-grid market continues to grow at 15-20 percent per year, the grid-connected market has been expanding at over 30 percent per year.

A recent EPRI study sought to look behind these estimates to document a representative sample of installed grid-connected PV systems in the U.S. The study found that many grid-connected systems are being built despite having a higher cost than conventional power.

Installations around the country

Eight projects were included in the study, representing a range of technology types, sizes, locations, and ages.

“- SMUD. For more than a decade, SMUD has persistently supported procurement and installation of PV in its service territory through programs, such as PV Pioneer I, in which residential customers can pay a small additional monthly cost to support a SMUD-owned PV system.

“- Shea Homes. A home developer is building 100 single-family homes, each with a 1.2-kW PV system as a standard feature.

“- Niagara Mohawk. A utility installed a 101-kW PV system with battery storage at a utility feeder to provide whole-building uninterruptible power supply.

“- Gardner, Mass. Installation of thirty 2.2-kW residential PV systems and five commercial systems is concentrated on a 13.8-kV feeder.

“- APS Ocotillo. This utility-sited, ground-mount, single-axis tracking system, installed by Arizona Public Service, is typical of PV systems operated by APS.

“- Mauna Lani Hotel. Horizontally mounted PV panels on hotel roof provide 80 kW of electricity, plus reduced building heat gain.
“- Stelle, Ill. One-third of homes in small community have installed PV systems.
“- Guerilla Solar. Small PV system was connected to the grid without permitting or utility involvement because homeowner decided that working with utility would be too troublesome.

Key findings

The main observations from the study are:

“- Amount of grid-connected PV. The most noteworthy observation is that there has been surprising amount of grid-connected PV activity, given that such systems are not yet cost-effective compared with conventional grid power. According to EPRI TAG methodology and other estimates, achieving true economic viability versus retail-grid electricity will require system capital costs of less than about $3,000 per kW, but most current systems were installed at about three times that cost, or even more.

“- Non-energy added values. People increasingly recognize PV’s various values, including the less tangible ones. This recognition leads some to pay a premium for PV energy. Utilities can realize distributed benefits by locating PV along a distribution feeder, achieving savings in line losses. Systems with storage and power conditioning can increase electric service reliability and power quality. Rooftop systems can add insulation value and protection for the roof. Parking lot systems can provide vehicle shade and weather protection.

“- Grid interconnection. PV at modest penetration levels does not cause significant technical problems for the utility grid. In fact, distributed PV systems can offer distribution companies various benefits— including lowered line losses, peak reduction, and deferral of expensive upgrades.

“- Reliability. PV modules have proven themselves to be reliable and durable, and they continue to work well after many years in service. Two problem areas are: inverter unreliability and output intermittency. The first problem can be mitigated by using a greater number of smaller inverters, stocking spare parts, and designing systems with backup inverters. Alternatively, applying PV direct current (dc) energy directly to grid-connected loads, which EPRI is now exploring, avoids the cost and reliability concerns associated with inverters. The second problem can be addressed by adding storage. As a general guideline, PV penetration can be up to 20-25 percent of load capacity without causing any problems.

“- Location. PV can be used anywhere in the United States. Systems in the Midwest and Northeast can be as beneficial as in the Southwest because the regional variation in sunlight, and therefore in PV energy cost, is smaller than the variation in retail electricity prices.

“- Strategies for funding. A number of strategies can be used to fund PV projects. For example, some utilities have initiated projects to field PV generation to supplement conventional power supplies. Over 90 utilities have rolled out green pricing programs, and in these programs PV is often the leading clean energy source. Various states and municipalities have established incentives for PV systems to promote PV’s benefits. Several states have mandates in place for renewable energy.

“- No impact on profitability. Energy companies can support PV without harming the bottom line. Green pricing programs, teaming arrangements, and identifying multiple values from PV can lead to projects that benefit all parties.

“- Teaming. Most of the cases studied involved cooperative arrangements among utilities, customers, government agencies, and suppliers. The stakeholders recognized that they have a common goal in implementing renewable energy.

“- Affordability. Even though PV electricity may be more costly on an energy basis, there appears to be a market if the systems are affordable to consumers. Small systems and financing of larger systems are two strategies along these lines.

“- Increased production. PV manufacturers are boosting production to supply increasing demand, both domestic and foreign.

Peterson is a project manager at EPRI, who began his specialization in solar energy research and development in 1971, when solar cells cost more than $100,000/kW in 2002 dollars. He can be contacted at 650-855-2594, tpeterson@epri.com.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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