SEPA Position Statement

Distributed Energy Resources (DER) are, and will increasingly be, a key resource in the portfolio of power system resources. DER are capable of delivering or offsetting energy, capacity, and ancillary services in a manner that fulfills both the legacy and the evolving regulatory compact.

This policy statement should not be viewed as endorsing any single technology, business model, or industry; rather, it should be taken as a basic set of principles that can be applied to the various scenarios related to the expanded deployment of DER. In order to reach their optimal potential, the following points should be considered:

1. Optimal deployment of DER will require proactive engagement and cooperation among utilities, technology providers, energy service providers and developers, financial entities, regulators, and consumers.

2. DER assets and technologies, regardless of ownership, must be deployed in front of the meter with consideration for the safety, stability and reliability of the grid, while providing transparency on the allocation of costs and benefits. When located on the customer side of the meter these same considerations should be taken into account to the highest degree feasible and reasonable.

3. Incumbent utilities possess unique detailed technical and operational knowledge of the grid, critical for optimizing the benefits from DER for all electric power customers both, individually and for the system overall. To realize the full value of DER, utilities will need to participate in:

• Evaluating the benefits and costs of DER, to ensure all stakeholders derive cost and benefits from integrating DER.
• Guiding the deployment – including location on the grid, wires upgrades, combinations of technologies per site, and details such as panel orientations – of DER to account for the current capabilities and conditions of the system as well as anticipated future needs.
• Developing standards for autonomous, semi-autonomous and direct control of DER. Utilities and owners will need to collaborate in the development, testing, and execution of those standards.
• Supporting additional technological advancement, with demonstration and pilot projects facilitated by incumbent utilities, in a manner in which costs and benefits are shared by the widest range of stakeholders.

4. Utilities can also bring additional benefits for deployment beyond grid integration, based on utilities’ access to and cost of capital, rate stability, relationships with their customers, expanded consumer education, and holistic experience with all types of DERs. These capabilities may be leveraged either through direct ownership, joint ventures, or advisory roles. They may include community solar, customer choice through targeted incentives and or tariffs, energy audits, on-bill financing, and utilities’ credit support to back the development of DER with a power purchase agreement. Utility involvement in DERs should be under terms that foster fair and reasonable competition among DER providers.

5. Non-utility DER ownership models, including direct customer ownership and third party ownership, can provide additional benefits. These benefits include diversity of customer choices, cost stability, and broader access to resources, including additional streams of capital, expanded consumer education, innovative customer acquisition models, and provision of complementary goods and services.

6. Proper policy safeguards are needed to ensure a vibrant and competitive DER market evolves ensuring that non-utility ownership models have equal and open access to the interconnection processes, clear direction from grid operators on deployment preferences, and transparency on the cost and benefits of the services provided.

Download the Paper

Abstract: Utilities and solar stakeholders have seen increased attention being paid to net energy metering policies as the penetration of distributed solar generation increases. The appropriateness for stimulating customer-sited solar installations has also become a prominent topic of discussion. In our examination of related discussions occurring throughout the United States, SEPA’s paper provides a common understanding of the underlying terms and concepts being used as part of the debate in order to give readers the necessary grounding to “talk from the same page.” Often times when terms are used, the meaning gets colored by the perspective of the particular stakeholder.

This paper uses feedback received from a diverse stakeholder group to provide an introduction to state utility regulation (particularly rate-setting), and solar value research that is key to facilitating discussions moving forward.

Key Points about SEPA’s “Collaboration” Paper:

• Having a common understanding of underlying terms and concepts being used in NEM discussions is critical to ensure stakeholders are “talking off of the same page.”
• This foundation provides common ground and builds trust that’s beneficial for current discussions and initiatives as well as those to come in the future.
• SEPA engaged a diverse group of stakeholder (approximately 25) that represent utilities, solar industry stakeholders, industry associations, and other organizations working on net metering and distributed solar issues.
• Feedback received from stakeholders was used to identify, highlight, and define an unbiased narrative on important terms and concepts.
• The focus was narrowed to provide an introductory understanding of two critical areas: state utility regulation (particularly rate-setting) and solar value research.
• SEPA will use this foundational primer to further engage stakeholders in the future with initiatives that will build consensus between stakeholders.

The SEPA Position on Net Energy Metering

On August 13, 2013, the SEPA Board of Directors agreed upon the organization’s first policy position, affirming SEPA’s support for the following principles on Net Energy Metering:

• Customer-sited solar generation will play an increasingly important role in the energy mix for utilities and consumers.
• Net energy metering (NEM) policies promote the deployment of customer-sited distributed solar generation in many markets.
• However, NEM and rate design, inherently linked, need to evolve to transparently allocate costs and benefits, compensating all parties for their value contribution.
• This transition will only be effective when utilities, the solar industry and customers collaborate to create a sustainable solar distributed generation marketplace.