Utility Distributed Energy Forecasts
A report by John Farrell, released July 2020.
Utility regulators must exercise vigilance to ensure that utility-scale and utility-owned investments don’t crowd out distributed energy solutions just because they do not provide profits to the monopoly utility’s shareholders.
Many U.S. utilities develop comprehensive resource plans every few years, often required by state law or state regulatory commissions. Especially in states where utilities have monopoly service territories, these plans set expectations for electricity use and the grid infrastructure required to meet it. However, these plans often drastically underestimate the contribution of electric customers and non-utility developers to the electricity system’s resources – specifically the contribution of distributed solar. Utility regulators often defer to the utility and blindly accept utility forecasts, despite significant evidence that the forecasts are faulty, to the financial and economic harm of electric customers.
Undercounting distributed solar has significant financial and economic consequences. As shown in the Smarter Grid and other studies of the value of distributed energy resources, distributed solar can provide cost-competitive carbon-free electricity and significant economic and wealth-building benefits to a broad array of electric customers.
This report explores the phenomenon of undercounting customer-sited and non-utility solar energy in Minnesota: a state with several adopted policies expressing a public interest in distributed generation. It explores this phenomenon with a utility that has a strong reputation for pursuing low-carbon resources that it controls, Xcel Energy. The report finds that Xcel Energy’s forecasts for distributed solar, including customer-sited and community solar, are significantly low in light of existing trends and comparative models. Accordingly, as in all states with monopoly regulated businesses, utility regulators must exercise vigilance to ensure that utility-scale and utility-owned investments don’t crowd out distributed energy solutions just because they do not provide profits to the monopoly utility’s shareholders.
Underwhelming Solar Forecasts
- ILSR compared Xcel Energy’s rooftop solar forecasts to two independent models and found that roof- top solar growth is likely to be double, or more, to what the utility anticipates.
- ILSR compared Xcel Energy’s community solar forecasts to the existing queue, recent growth trends, and system constraints and found that – barring legislative action to curtail it – community solar is likely to far outstrip the utility’s projections.
- ILSR noted the lack of any forecast for wholesale distributed generation, despite several state-sponsored studies showing its economic superiority to transmission-connected resources. We also found that Minnesota’s lack of compliance with federal competition law seriously undercuts the opportunity for this market to develop.
Xcel Energy’s forecasts for distributed solar, including customer-sited and community solar, are significantly low in light of existing trends and comparative models.