Aside from the environmental benefits and lower utility bills, installing solar panels in your home will benefit your entire community. Appreciations for on-grid photovoltaic systems show that solar modules are beneficial for both utility companies and consumers.
For years, some utility companies have feared that solar panels will increase electricity costs for people without modules. Joshua Pearce, Richard Witte, endowed professor of materials science and engineering and professor of electrical and computer engineering at Michigan Technological University, has shown that the opposite is true: grid-tied solar photovoltaic (PV) owners actually subsidize their non-PV neighbors.
Most PV systems are grid-tied and convert sunlight directly into electricity, which is either used on site or fed back into the grid. At night or on cloudy days, customers who own PV use electricity from the grid, so no batteries are required.
“Anyone who builds solar panels is a great citizen for their neighbors and for their local utility,” Pearce said, noting that someone who puts on-grid solar panels is essentially investing in the grid itself. “Solar-powered power customers are doing it so that utility companies don’t have to make as much infrastructure investment while solar lowers peak demands when power is most expensive.”
Pearce and Koami Soulemane Hayibo, PhD students in the Michigan Tech Open Sustainability Technology (MOST) laboratory, found that on-grid customers of PV-owned utilities in most of the US are undercompensated because of the “value of solar” in both net metering and Eclipses net metering and two-tier tariffs that energy suppliers pay for solar power. Their results are now being published online and included in the March issue of Renewable and Sustainable Energy Reviews.
The value of solar is becoming the preferred method for evaluating the economics of on-grid PV systems. The value of solar calculations is challenging, however, and there is widespread disagreement in the literature about the methods and data needed. To overcome these limitations, Pearce and Hayibo’s article review previous studies to develop a generalized model that takes into account realistic costs and liabilities that utility companies can avoid when individuals install on-grid solar panels. A sensitivity analysis is performed on the core variables for each component of the value, and these sensitivities are applied to the total value of solar.
The total value of the solar equation consists of numerous components:
- Avoided operating and maintenance costs (fixed and variable)
- Avoided fuel.
- Avoided generation capacity.
- Avoid reserve capacity (systems in standby mode that turn on when you have a large air conditioning load on a hot day, for example).
- Avoidance transmission capacity (lines).
- Environmental and health liability costs associated with forms of electricity generation that are harmful to the environment.
Pearce said one of the goals of the paper is to provide the equations for determining solar value so that individual utilities can enter their proprietary data to quickly make a full assessment.
“It can be concluded that significant future legislative reform is needed to ensure that on-grid solar PV owners do not unduly subsidize US electricity suppliers,” said Pearce. “This study gives decision makers more clarity so that they can see that solar PV is really an economic benefit in the best interests of all utility customers.”
Solar PV technology is now a profitable way to decarbonize the grid. However, if catastrophic climate change is to be avoided, emissions from transportation and heating must also be decarbonized, argues Pearce.
One approach to renewable heating is to take advantage of improvements in PV with heat pumps (HPs), and it turns out that investing in PV + HP technology gives better returns than CDs or savings accounts.
To determine the potential for PV + HP systems in Michigan’s Upper Peninsula, Pearce performed numerical simulations and economic analysis with the same loads and climate, but with local electricity and natural gas rates for Sault Ste. Marie, who is based in both Canada and the US, can profitably install PV + HP systems for households and achieve up to 1.9% ROI in the US and 2.7% in Canada on her total electricity and Cover heating needs.
“Our results suggest that northern homeowners have a clear and easy way to reduce their greenhouse gas emissions by making an investment that offers a higher internal rate of return than savings accounts, CDs and global investment certificates in the US and Canada,” said Pearce. “PV and solar-powered heat pumps for residential buildings can be seen as a 25-year investment in financial security and environmental sustainability.”
Source of the story:
Materials provided by Michigan Technological University. Originally written by Kelley Christensen. Note: The content can be edited by style and length.