Photovoltaic Systems Engineering Application to PV Systems SEC598F18 Photovoltaic Systems Engineering Session 21 Policy Analysis Application to PV Systems November 19, 2018

Session 21 Learning Outcomes An overview of the various aspects of policy and impact on the solar enterprise An introduction to the factors that aid or hinder the expansion of the solar enterprise

Value to course participants A recognition of the interrelationships among: Engineering and technology efforts Business and economic components Policy frameworks These components are essential in the development and adoption of solar power.

Policy What is policy, why is it necessary, and what are its essential elements? What are the pillars of solar policy and who establishes the policies themselves? What are some examples of existing policies? What are the impacts of solar policies?

Policies for Residential Systems Market Creation Policies Renewable Portfolio Standards Solar Carve-outs Energy choice, CCAs Market Expansion Policies Financial incentives Grants, rebates, tax incentives Financing options Solar leases, third-part ownership, PACE Lead-by-example policies

Policies for Residential Systems Environment Arizona “Lighting the Way” Ten U.S. states lead the nation in the amount of installed solar electricity capacity per capita. All ten of these states have strong solar energy policies Strong Policies lead to Strong Markets

Solar Energy Policies can be Established by just About Any Entity International National Regional State Municipality Neighborhood Private and Public Company University

PV Systems Residential Scale Non-residential Scale Utility Scale Self-consumption Power export Peak shaving Self-consumption Power export Direct power export to the grid

The Role of Politics

Background on DSIRE Database of State Incentives for Renewables & Efficiency Created by the NC Solar Center in 1995 Funded by the US DOE (EERE) Administered by NREL Approximately 2,700 entries Renewable energy and energy efficiency Rules, regulations, policies, and incentives Approximately 200,000 visitors/month

DSIRE Database Content All State incentives and policies – including DC and territories All Federal incentives and policies Most Utility incentives Some Local policies and incentives – examples and largest cities/counties

Background on the Governor's Office of Energy Policy The Governor's Office of Energy Policy (OEP) was established by Governor Jan Brewer and effective July 1, 2011, moved the Energy Office from the Arizona Commerce Authority. VISION To lead Arizona to a clean and reliable energy future by promoting policies and initiatives that strengthen the economy, better the environment and ensure lasting energy security. MISSION To be the national leader in renewable energy development, while buoying traditional energy sources with new clean technologies and increased efficiency to benefit all Arizonans.

Arizona Office of Energy Policy http://www.azenergy.gov

Residential PV Systems Renewable Portfolio Standards (RPS) Often has a “solar carve-out” – a portion of the RPS must be met by Distributed Generation (DG), or rooftop solar Incentives Federal Investment Tax Credits (ITC) – Reduces Initial Investment State Tax Credits Utility incentives Public Utility Commission Policies Net Electrical Metering – Reduces Annual Cash Payments

Commercial and Industrial PV Systems Renewable Portfolio Standards (RPS) C&I systems are also included in Distributed Generation (DG) solar carve-out Incentives Federal Investment Tax Credits (ITC) State Tax Credits Accelerated Depreciation Schedules Public Utility Commission Policies Net Electrical Metering Demand Charges

Utility Scale PV Systems Renewable Portfolio Standards (RPS) Used to meet RPS values, usually through the generation and sale of Renewable Energy Credits (RECs) Incentives Federal Investment Tax Credits (ITC) Federal Solar Energy Zones (SEZs)

ITC For Solar Energy Systems, the credit is equal to 30% of expenditures, with no maximum credit. Eligible solar energy property includes equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Hybrid solar lighting systems, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible. Passive solar systems and solar pool-heating systems are not eligible.

Renewable Portfolio Standards (RPS) Arizona

The compliance schedule is: Arizona RES (details) The compliance schedule is: 2006: 1.25% 2007: 1.50% (5% DR) 2008: 1.75% (10% DR) 2009: 2.00% (15% DR) 2010: 2.50% (20% DR) 2011: 3.00% (25% DR) 2012: 3.50% (30% DR) 2013: 4.00% (30% DR) 2014: 4.50% (30% DR) 2015: 5.00% (30% DR) 2016: 6.00% (30% DR) 2017: 7.00% (30% DR) 2018: 8.00% (30% DR) 2019: 9.00% (30% DR) 2020: 10.00% (30% DR) 2021: 11.00% (30% DR) 2022: 12.00% (30% DR) 2023: 13.00% (30% DR) 2024: 14.00% (30% DR) 2025: 15.00% (30% DR)

Net Metering At the end of each month, a utility bill is calculated: Electricity Generation = Number of kWh purchased from utility – Number of kWh exported to utility +/- residual credits (in kWh) to/from “energy bank” This is all carried out at the retail rate Once a year, the residual credits are cashed in: This is carried out at the wholesale rate In some utilities, the reset date is 12/31 In other utilities, the reset date is 04/30