GridSolar Proposes Innovative Alternative to CMP’s Rate Plan
Solar Power | May 12, 2014 | Posted by Fred Greenhalgh
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Maine’s PUC is currently deliberating the CMP rate case, which has potentially serious negative effects on solar should it be approved. However, due to the passage of LD 1652 which instructs the PUC to research the value of solar, and the depth of testimony pointing out serious issues in CMP’s proposal, we are tentatively optimistic that the proposal will be defeated. The PUC will make a decision in June.
In the meantime, answering the question “What’s the alternative?” is GridSolar, a group that recently garnered approval from the PUC to be considered to manage Maine’s smart grid. GridSolar opposed CMP’s $1.4 billion MPRP upgrade project – a transmission upgrade it suggested was unnecessary and too expensive – and ultimately receive the authority to manage a ‘non transmission alternative’ pilot project in Boothbay.
The Boothbay pilot project is on track to meet the peninsula’s growing energy needs for 1/3 of the cost of CMP’s plan, and GridSolar is proposing to roll out their findings more widely in Maine.
What’s Happening in Boothbay and Why it Matters
New England’s electric grid is summer peaking. On the hottest days of summer, air conditioning loads strain the grid to the point of breaking (as it did in 2011 when power to Rte 1 in Saco, ME snapped and the state’s largest water parks had to close).
On these days, the rate for electricity quadruples (or more) as additional, especially inefficient, standby generation resources are brought online and fed into the grid as quickly as possible. Power plants are traditionally located in far away industrial zones, and not in residential or commercial areas where power is needed, and so, the grid needs not only more power during these system peaks, but also more power lines to deliver that power. Ergo, CMP’s default strategy of adding as many power lines as possible to upgrade the grid’s backbone.
However, common sense shows that there is an alternative; for example, below is research from July 2013 which plots solar production (Green) of an example system vs. cost of electricity from the grid during a heat wave (blue):
Solar power, by definition, creates electricity on the days when the grid is strained – and harnessing solar along with other smarter technologies can help avoid the need for bigger power lines by generating and using power locally.
This argument is what won the settlement with CMP, giving GridSolar the opportunity to demonstrate how solar combined with other “Non Tranmission Alternatives” (NTA) technologies, could meet the needs of the Boothbay peninsula. Their mandate from the PUC required them to use a variety of technologies to reduce 2 megawatts (MW) of load to avoid CMP’s proposed $18 million transmission upgrade. GridSolar has been under strict PUC requirements that none of their solutions may cost more than the avoided cost per kilowatt-hour from the grid.
What’s Wrong with Utility Billing?
If there’s one thing that both renewable advocates and CMP agree on, it’s that the billing model for the grid is out of date. The reason being, the long-term cost drivers of the grid are NOT the day-to-day management of the service – maintenance of existing lines, repair after ice storms, etc. – but this system-wide growth to meet peak demand with expensive transmission upgrades. Indeed, Maine’s overall electric consumption is flat or falling, so to assert that we need to build out a significantly larger backbone flies in the face of logic. We need a smarter, not a bigger, grid.
Current CMP billing reflects billing for a customer’s actual use, their ‘volumetric’ charges. Most residential customers in Maine pay the same rate year-round for a kilowatt-hour of electricity, whether it is a kilowatt in the middle of night in December or in the middle of that seriously sizzling day in August. Under this model, there is no particular incentive to use power more efficiently or at different times of day, because at the end of the month the result is all the same.
CMP’s proposal under this rate case is to compensate for this phenomenon by raising fixed costs to ALL customers, so that certain fixed fees for expanding the grid are recovered. This would have the effect of making solar investments less attractive because you would have less control over your bill – make your own power, you would pay the same. Use less power, you would pay the same. Don’t use your camp for six months of the year? Pay the same. Those who have made commitments to energy efficiency would suffer, while those who consume greater amounts of electricity would have their bills subsidized, giving them a perverse incentive to consume more electricity. Of course, greater electricity consumption results in needing bigger transmission lines, and bigger transmission lines require raising rates, and…
GridSolar uses the theory of ‘marginal cost’ economics in their proposal for an electric rate structure that more accurately bills for behavior that increases cost on the system.
Under the GridSolar plan, a CMP customer would still pay a fixed-price, however, the fixed price would not be the same for all customers, but reflective of what their consumption was during the peak days of the system. Meaning – if your home was an energy hog, with air conditioning, pool motor running and electric appliances chugging during the dog days of summer, your bill would be higher than someone who is running all of the same appliances except generating 100% of their power from solar at the time of system peak. Alternatively, you could also reduce this fixed part of your bill by managing your load on those hot days – investing in a more efficient air conditioner (or not running one at all), drying clothes during off-peak hours, etc. Certain behaviors would not substantially help reduce your bill – using electricity for heat or improving your lightbulbs – since utilizing electricity during off-peak hours does as significantly impact the long-term costs of maintaining the grid.
Under GridSolar’s model, the consumer would be charged a rate more reflective of how their behavior effects long-term cost drivers on the system, and would be incentivized for behavior that benefits everyone. Solar electricity would be compensated for its real-world value to the grid, eviscerating the recurring argument that solar producers are ‘free riders’ on the grid. As it is, solar photovoltaic systems are already providing more benefit to the grid than they extract out of the net metering arrangements. GridSolar’s proposal merely codifies this relationship in economic theory.
Smarter or Bigger?
At heart of this entire debate is – what is the nature of a 21st century utility and what is a fair way to ensure that costs for necessary services are recovered? Utility companies across the country are grappling with the reality that the current system is inefficient, big, and expensive.
Solar power is increasingly cost-effective, emits no pollution, and democratizes energy – a homeowner can own their source of energy and not be dependent on a foreign-owned corporation monopoly for an essential service. Some utilities – such as Vermont’s Green Mountain Power – embrace the change by encouraging solar and adapting their business model to suit. Others, such as New Jersey’s NRG, are using their established market position to make big moves into the solar space, and are making a go at taking on national solar players such as SolarCity.
In Maine, we look to the PUC to reach a sensible decision that is in the best interests of Maine’s ratepayers and not Spanish investors. GridSolar’s ideas are bold, but we are at a moment when bold ideas are necessary to adapt our aging, fossil-based infrastructure to one that can sustain us in the 21st century.
- Maine Green Building: The Boothbay Pilot Project is Making Waves
- CMP and solar energy advocates clash over what’s the smartest grid for Maine
- The GridSolar Pilot Project
for the Boothbay Region (PDF)
- PUC Order Approving Boothbay Pilot Project
Disclosure: ReVision Energy, LLC and GridSolar, LLC are separate companies and have no official relationship with each other. GridSolar’s counsel, Steve Hinchman, is also our Director of Finance. ReVision Energy has competitively bid for and won a few solar projects in a transparent RFP process as part of the Boothbay pilot project along with other vendors.