“Value of solar” studies often fall short in developing full policy picture, says Harvard expert

April 26, 2016

Harvard regulatory expert Ashley Brown said regulators should view value of solar (VOS) analyses “with a great deal of skepticism” in written testimony filed for the Arizona Corporation Commission’s current hearing on the value and cost of distributed generation.

Brown, who appeared at the hearing April 25, is the Executive Director of the Harvard Electricity Policy Group (HEPG). He also served as Commissioner of the Public Utilities Commission of Ohio for 10 years (1983-93) and has worked as an advisor on infrastructure regulatory issues to governments around the world.

In his testimony, Brown said that value of solar analyses are often subjective and are inconsistent with the way other power resources are typically priced, based on costs and/or markets. Here are some of the highlights:

  • “A recent study by the Brattle Group comparing generation costs of grid-scale and rooftop solar in Colorado confirms that rooftop solar is likely even less efficient at reducing emissions than grid-scale solar: "Simply stated, most of the environmental and social benefits provided by PV systems can be achieved at a much lower cost at grid-scale than at residential-scale." (Feb. 25 direct testimony, p. 17)
  • Prices for solar arrangements should encourage innovation by incentivizing storage, incentivizing methods of capturing system benefits such as encouraging western as opposed to southern exposure to make it more coincident with peak, or incentivizing the use of smart invertors, among other options.” (Feb. 25 direct testimony, p. 58)
  • “It is noteworthy that most, if not all, VOS studies simply do not address why other, more efficient forms of renewable energy should be treated differently, for pricing purposes, than rooftop solar. They do not even suggest that perhaps the price of grid-scale solar and wind might be used as a benchmark to assess the reasonableness of the value figure they derive.” (Feb. 25 direct testimony, p. 60)
  • “In fact, when it comes to reliability, it is much more accurate to say the grid provides reliability to rooftop solar than the other way around. Not only does the grid ensure service when the sun is not shining, but in the case of an outage, a solar-powered home does not, on its own, have the ability to re-start the home’s systems without a boost of energy from the grid.” (Feb. 25 direct testimony, p. 39)
  • “VOS analysis typically ignores the social impact of policies, such as net metering implemented to support distributed solar. Empirical studies on this subject have indicated that net metering pricing has a regressive social impact. It is, in fact, a wealth transfer from lower-income people to higher-income people. Rarely do you find this wealth transfer assessed in VOS studies. But it is a social cost, and it ought to be assessed.” (Feb. 25 direct testimony, p. 24)
  • “And when the solar host is either self-consuming or exporting to the system, whenever they're generating energy, they are not paying their share of those fixed costs; and when they're generating energy, they're not only not paying their share, they're getting compensated as if they performed the services that the fixed costs cover. So it's an enormous burden that's shifted away from the solar customers to the nonsolar customers.” (April 25 oral testimony)