Solar

Brattle Group's Fox-Penner says utility scale significantly more cost-effective than residential

With the U.S. Energy Information Administration predicting a doubling in utility-scale solar installations by the end of 2016, how cost-competitive is it compared with other forms of solar? During today's OnPoint, Peter Fox-Penner, a principal at the Brattle Group, discusses a new analysis comparing the costs of utility-scale solar versus residential-scale projects. He also talks about the impact storage technology development could have on the pacing of installations.

Transcript

Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Dr. Peter Fox-Penner, a principal at the Brattle Group. Peter, thank you for joining me.

Peter Fox-Penner: My pleasure.

Monica Trauzzi: Peter, the Brattle Group has released a study that examines utility-scale solar. What makes this analysis unique? You're calling it first of its kind.

Peter Fox-Penner: Well, Monica, what's interesting about this study is that we've seen lots of studies that compare solar to traditional generation and so-called value of solar studies and lots of integrated resource plans we've been doing for decades, but this is the first comprehensive study to look at the -- in great detail at the two different scales of solar: residential, or rooftop, solar and utility-scale solar. And we're comparing equal amounts of those types of solar in a candidate system, namely the Xcel Energy Colorado system. So we did a kind of thought experiment where we installed equal amounts of solar and looked at the difference in costs.

Monica Trauzzi: And what did you find?

Peter Fox-Penner: Really we were surprised to find that the utility-scale solar really came in at half the cost of residential rooftop, a bigger cost difference than we thought, and we used very, very conservative assumptions that favored rooftop and still found a factor of two cost difference.

Monica Trauzzi: This comes at the same time as U.S. EIA is predicting utility-scale solar will increase by 100 percent by the end of 2016. What are the dynamics that are positioning solar for such a dramatic increase?

Peter Fox-Penner: Well, there are lots of dynamics, Monica. First of all, we know that there's enormous and good pressure to decarbonize our electric system. We're heading towards the Paris Conference of the Parties. China's moving on this. We have the Clean Power Plan here in the U.S. That's going to be a big driver for renewable energy, not just solar, but all forms of renewable. Also, solar has dropped enormously in price -- 80 percent since 2000 for utility scale, even more so than rooftop. Utility scale has been dropping more quickly than rooftop solar, so that's helped utility scale. So there's a whole variety of factors.

Monica Trauzzi: So does it still make sense for people to pursue the rooftop option?

Peter Fox-Penner: For people who desire that, absolutely. There's no question that rooftop solar's really valuable to some customers. They love it. I have a system on a house and, you know, it's a good thing. It can help the distribution system at times, and it's going to be a form of energy that we -- that we're going to want to keep around permanently. But what the study does tell us is that we -- that utility-scale solar is an extremely valuable tool in our arsenal for decarbonization, very cost-effective, and it also provides solar for everybody. Doesn't matter what orientation your roof is or isn't, whether you own a roof.

Monica Trauzzi: So then how does this translate into the debate on distributed generation?

Peter Fox-Penner: Well, it just -- it's really a reminder, Monica, that the only form of solar isn't the solar panels you put on your house, that there are other forms of solar. And by the way, I should mention that community solar is also an extremely good option. It's kind of intermediate in size between a system that goes on your home and a big multi-megawatt utility system. It is the fastest-growing segment of solar. It can be in your neighborhood and supply a dozen or a hundred houses in your neighborhood, or buildings. So it's a very interesting type of solar, and all three of these types of solar are very valuable. They all have their place.

Monica Trauzzi: And we're seeing utility-scale solar in some instances is beating out natural gas in terms of pricing. What percentage of total power-sector energy do you think we could eventually see solar taking up?

Peter Fox-Penner: Well, solar will unquestionably give us, oh, I think a quarter to -- long run, a quarter to a third of our electricity, I think, in the U.S., and at least in sunny places, and maybe more. We don't really know, but just rough off the top of my head, I think it's going to be a very substantial segment. Now, let's remember there's also other forms of solar -- concentrating solar. Wind is a very, very important resource, geothermal. As we decarbonize the system, we're going to rely on many renewables.

Monica Trauzzi: But it's a bit of an unknown also because of -- there's a question mark on battery storage and where that technology is going, so could we see potentially a slowdown in the pacing of installations if the technology for storage doesn't keep pace?

Peter Fox-Penner: Well, it's hard to see that, Monica, because already storage is good enough that it's already enhancing the value of solar, and even where we don't have storage, we have 38 percent year-on-year growth rate in solar. A lot of the utility-scale solar is growing with just current battery technology. All our research says that, you know, batteries are on an evolutionary path, and let's remember that you can integrate renewables without the need for batteries, per se. We'll have batteries, but there's other means of integrating renew -- variable renewables. So, you know, we see a bright future for the industry.

Monica Trauzzi: All right. We'll end it right there. Thank you so much for your time. Thanks for coming on the show.

Peter Fox-Penner: My pleasure.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]

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