Over the past year and a half, the Tennessee Valley Authority (TVA) worked with stakeholders to study the value of rooftop solar systems. On October 20, TVA published the result, “Distributed Generation – Integrated Value (DG-IV): A Methodology to Value DG on the Grid.” TVA’s study did partly accomplish one objective: determining numerical values to quantify some of the savings solar energy provides to the TVA system. However, TVA has fallen short of its promise to use the process to inform future solar program design. Instead, TVA recently announced plans to roll back incentives for its 2016 distributed solar programs.
Solar’s full value is not recognized in the DG-IV methodology results
The growing popularity and affordability of rooftop solar systems, along with a desire to re-examine its solar incentive programs, led TVA to initiate the DG-IV process in 2014. As in other parts of the country, the Local Power Companies (LPCs) that distribute electricity in the TVA region and solar advocates and businesses have been on different sides of the fence when it comes to distributed solar. The NC Clean Energy Technology Center, which issues a quarterly report tracking state distributed solar markets and policies, notes that “Rate design, net metering, and distributed solar ownership are among the most contentious ongoing renewable energy policy issues.”
Since the inception of the Green Power Providers program in 2000, TVA has gradually reduced the rate premium offered to subscribers and plans to eliminate the premium altogether in 2016. Rather than working to create a viable market to take advantage of the 30,000 MW of potential rooftop solar capacity TVA estimates in its territory, recent moves at TVA indicate instead a desire to move away from distributed solar. As of April, the GPP program included 85.4 MW of solar either operating or in-process, a paltry total in comparison to the potential. Steve Johnson, President of Lightwave Solar and Vice President of TenneSEIA, projects that elimination of the incentive in 2016 will result in even slower growth in the rooftop market than that seen in previous years.
The story is even worse for SSI, the Solar Solutions Initiative previously in place for projects between 50 kW and 1 MW. These are the larger systems that can be installed on commercial and industrial rooftops as well as mounted on the ground. As of April, a mere 7.5 MW of these systems were in operation, with an additional 38 MW in development. The program has traditionally been capped at 20 MW annually, and in 2015 4 MW of that total was allocated to the local power companies, who have been slow to develop projects. At the DG-IX meeting, TVA announced its intention to make significant changes to SSI. The new program, called the Distributed Solar Solutions (DSS) program, will be capped at 10 MW in 2016, and all applications will have to go through the LPCs which often lack the expertise and staff resources to develop projects.
Both the solar industry and environmental advocates believe these changes will effectively kill this market segment before it can even really get started. And these changes were made without consulting stakeholders, and for 2016 not 2017 and beyond. During DG-IV, SACE and the other stakeholders were told that the process was meant to continue beyond development of the methodology to a program design phase that would consider how to effectively incentivize the small-scale solar market in future years. We call on TVA to continue with its 2015 program incentives in 2016 and to convene the DG-IV program design phase for 2017 as they had promised.