Industry Challenge

The Challenge

The electric utility industry has seen a continual influx of residential solar over the past 5 years. The adoption of rooftop solar has been accelerating dramatically in recent years due to government incentives, flexible financing options and rapid cost reductions. For example, Maui Electric is experiencing a doubling of residential rooftop solar annually. San Diego Gas & Electric has circuits with well over 40% distributed solar penetration. While this seems logical in areas that have electric rates above 18 cents per kWh, which is the solar grid-parity rate, government incentives have also driven customer investments as have the environmental awareness of the younger generation of consumers. As a result, utilities across the United States, Canada, the Caribbean and any other island system are seeing solar penetration rates that are affecting grid stability and their financial health.

With large penetrations of distributed solar, many circuits have drastically different operating conditions from those seen only a few years ago. The results can have significant, detrimental effects on grid operations. First, under a net metering model, utilities do not know how much these generation sources are currently producing. They may know the installed capacity, but not real-time energy output. To provide reliability, utilities must have new contingency plans in case the distributed resources become unavailable. Currently, the utility response has been to object to large penetration of solar on individual circuits. Hawaiian Electric companies limit this penetration to 120% of daily minimum load then new generation is allowed on a case by case basis following a circuit analysis (BTW: this percentage cannot possibly be calculated by anyone other than the utility). More recently, they have eliminated NEM altogether and have options for a grid-supplied connection which pays approximately 1/3 the residential rate for your exported energy or self-supply with no export option and batteries required. Other utilities have asked their Public Utility Commissions for relief through various means including: higher monthly connection fees or demand charges for customers who own solar generation; a limit on the term of net metering payments, decoupling of rates, and adjusted rates for the net metering price.

Some utilities are exploring alternatives that will allow them to embrace distributed solar. Arizona Public Service has petitioned, and received approval from, their PUC to own and operate distributed rooftop solar through agreements with their customers. Approval will allow APS to include distributed solar in their rate base for investment recovery. Other Utilities are interested in improved situational awareness and optional control of residential solar installations through customer compensation similar to how demand response agreements are done today.

IDS provides a solution where you can install the latest inverter/battery options to collaborate with your utility and optimize the benefits you receive regardless of the utility program being offered. This relationship would be built on providing interested parties full awareness of installed capacity, energy output, battery storage and grid dynamics that determine real-time operating decisions at each residence for an aggregated benefit to the grid, non-solar customers, solar-generating customers and finally align utility operations with political, social environmental, and energy independence goals.

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