Solar Energy: Helping Pennsylvania Consumers, Businesses, and Communities - April 26th 2022
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April 26th Solar Energy: Helping
2022 Pennsylvania Consumers,
Businesses, and Communities
THIS DOCUMENT IS PROPRIETARY AND CONFIDENTIAL |
©2021 1Agenda
• Economic and Community Benefits of Solar
• State of Solar in PA
• Pennsylvania’s Energy Future
• Current Solar Legislative Proposals
• CRA Presentation on Customer Savings through Solar Energy
Deployment
• Concluding Remarks
• Q&A
©2021 2Solar Benefits
Why Invest in Solar Energy in Pennsylvania?
• 86% of Pennsylvanians believe that energy and utility costs in
Pennsylvania are getting more expensive.
• 61% of Pennsylvanians believe that with prices for everyday goods rising
from inflation, it is important for people to have more ways to save
money, like with discounts on their electricity bills from solar energy.
• 56% of Pennsylvanians believe that solar represents new technology and
advances in energy production should be expanded to meet energy
needs.
• 61% of Pennsylvanians believe that in addition to creating job
opportunities in Pennsylvania, solar energy can help lower utility costs
for small businesses that can then invest in new and higher paying jobs.
Source: Cygnal, Survey of General Election Voters Statewide, February 2022
©2021 3Solar Benefits
How Does Solar Energy Help Pennsylvania
Consumers, Businesses, and Communities?
• Solar energy protects businesses from Unsubsidized Levelized Cost of Energy
skyrocketing inflation by lowering utility costs $/MWh
and guarding against fuel price volatility
400
• Solar energy provides a reliable and consistent 350
revenue stream for rural communities,
creating savings for local taxpayers and helping 300
to fund critical infrastructure, public health and 250
safety services.
200
• Solar energy provides a financial lifeline for
farmers and their families and saves rural 150
open spaces from being paved over for 100
development.
50
• Solar energy is the most affordable electricity
0
source for consumers. It is the cheapest source 2009 2011 2013 2015 2017 2019 2021
of new electricity today and produces during
hot summer days when electricity prices are Gas Peaker Nuclear
highest Coal Gas Combined Cycle
Wind Solar PV
Source: Lazard’s Levelized Cost of Energy Analysis, October 2021
©2021 4Solar in PA
State of Solar in Pennsylvania
• It’s been 18 years since the 2004 AEPS Act Pennsylvania Generation Mix (2022 Exp.*)
was passed, which required a certain % of Nuclear
all energy sold to retail customers be derived 31%
from alternative energy sources, using
Alternative Energy Credits (AECs)
to demonstrate compliance.
Hydro
1%
• PA, a major net exporter of power which Solar
generates 35% of total electricity in the PJM 0.2%
region today, only generates 5% of the solar Wind
power in PJM, which does not have nearly as 2%
Gas Other
much solar as most other US regions. 51% 1%
• As the 2nd largest natural gas producing Coal
state in the U.S., with an increase in solar 14%
development, Pennsylvania can emerge as
the national leader in overall energy
production.
Coal Gas Nuclear Hydro Solar Wind Other
* This excludes behind-the-meter resources such as rooftop solar
©2021 Source: CRA modelling 5PA Energy Future
Natural Gas + Renewables = Abundant, Domestic Energy
• Pennsylvania must develop a forward-looking energy strategy that focuses on
removing government regulations and increasing domestic energy production
using an “all of the above” approach that includes all competitive energy solutions:
• Natural gas
• Solar
• Renewable natural gas
• Hydrogen
• Carbon capture and sequestration
• Pennsylvania consumers and businesses deserve to have real energy freedom and
the ability to choose their energy source while benefitting from the stable, low-cost
energy prices that solar and natural gas power can deliver.
©2021 6Legislative Proposals
Competitive Energy Solutions for Pennsylvania:
Legislative Proposals
Competitive Procurement Community Solar
• Requires Electric Distribution Companies to • Authorizes third party entities not considered
procure an increasing % of new solar EDCs or electric co-ops to build and operate
generation each year through 2030. mid-scale solar facilities.
• The annual total % requirement must be • Requires EDCs to file a tariff with the PUC
procured from non-customer solar which provides customers with a monetary
generators using 20-year PPAs at a price to be bill credit for every KW hour produced by
established annually by the PUC. their subscription.
• Each EDC must: • The private sector third party entities must
• Issue annual RFPs; take on all investment risk (demonstrate an
• Sell energy in the applicable regional PJM executed interconnection agreement, site
market; control, permitting, and sign- up subscribers)
• Be provided a % of annual payments for grid to then receive a bill credit equivalent to the
integration services; EDC’s price to compare and a grid services
• Account for the purchase of solar generation as payment.
a regulatory asset; and
• RECs are sold on behalf of ratepayers.
• Retire RECs.
©2021 7Legislative Proposals
Competitive Energy Solutions for Pennsylvania:
Legislative Proposals
Competitive Procurement Community Solar
• Competitive Procurement legislation can facilitate • Community Solar legislation is critical to
low-cost solar through a competitive bidding enabling mid-scale solar facilities in
process, subject to a price cap. Pennsylvania
• Furthermore, 20-year contracts for winning • Mid-scale solar facilities largely retain economies
projects will allow these projects to bid highly of scale and through interconnection at lower
competitive rates, by reducing financing costs. voltage levels closer to customer demand; these
facilities create a range of additional benefits
for ratepayers which are not compensated
• Taken together, these elements of Competitive today
Procurement legislation could substantially
reduce the costs of large solar facilities and
increase the rate of adoption, which would • Community Solar legislation would better align
ultimately benefit Pennsylvanian electricity the compensation of these resources with the
customers and rural communities. benefits that they create, thereby creating a
level playing field for these facilities and
benefiting Pennsylvania residents
©2021 8CRA Analysis
Overview of CRA Analysis
• CRA evaluated costs and benefits of both Competitive Energy Solutions
• From the perspective of consumers in Pennsylvania
• Quantified as Net Present Value (NPV) of net benefits over the next decade
• Two scenarios considered:
• Base case – No new solar-enabling legislation in PA
• Policy case – policy proposals in previous slides
• Net costs and benefits determined by comparing results from the two scenarios
• Employed fundamental market models
• Key assumptions developed with public sources where available
• Tested two sensitivities: one where current high fuel price paradigm extends for several
years with lingering impacts, and another where prices return to their prior expectations
©2021 9CRA Analysis
Annual Solar Additions – Base and Policy Cases
Annual Pennsylvania Solar Additions, 2022-2033 (MW) *
MW
Pre-Policy Period Policy Period Post-Policy Period
2,000
Difference caused by policy-driven demand
Modeling past 2033
1,800
shows additional solar
1,600 growth in both cases
Similar growth –
1,400 assumed to be
much higher Lower solar installations
1,200
than historical, related to reduced capacity
1,000 but well below needs at PJM level
policy trajectory
800
600
400
200
0
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Base Case Policy Case
©2021 10
* Does not include behind-the-meter solar installationsCRA Analysis
Categories of Costs and Benefits
Studied by CRA
Benefits
Avoided Costs
Avoided Energy Costs Community
Competitive Avoided Capacity Costs Solar
Procurement Program
Price Suppression
Lower Energy Prices
Lower Capacity Prices
Procurement Cost Community Solar Costs
Other
Contracted “PPA” Payments REC Sales Facility Payments
(“Price To Compare”)
Avoided T&D Investment
Grid Services Payment
* This study focused on ratepayer benefits,
and did not incorporate economic benefits
such as employment, taxes, and landowner
payments, or environmental benefits.
©2021 11CRA Analysis
The combined policies bring $700 – $1,570 million in cumulative
net benefits (NPV) in the next decade
Total Net Benefits & Costs, Combined Policies, 2024-2033 ($ million, nominal)
Benefits Costs Net
5,000
$Millions
150 2,720
4,500 300
180 60
4,000 670
Fuel sensitivities:
3,500 1. Prices based on
3,220
expectations prior
3,000 to recent increases
2. Current high price
2,500 paradigm continues
2,000 680
1,570
1,500
These bars are results assuming Fuel Sensitivity 1, and 480
1,000 therefore show the lower end of likely benefits.
700
500
-
Energy Capacity Energy Capacity REC Sales Avoided T&D PPA Costs Price To Grid Fuel Fuel
Compare Services Sensitivity Sensitivity
Avoided Costs Price Suppression Other Payment 1 2
Note: Each Competitive Energy Solution can bring net consumer benefits when considered separately. The Competitive
Procurement proposal creates net benefits in each tested sensitivity. The Community Solar proposal's net benefit position is
©2021 12
tied more closely to fuel price outcomes and utility retail pricing and procurement actions.Concluding Remarks
Conclusion
These legislative proposals would promote competitive energy solutions by enabling private
sector development, and thereby:
• Facilitate increased domestic energy production in PA as part of an “all of the above”
energy strategy
• Provide greater choices to consumers for their energy sources
• Create stable tax revenue for rural communities for much-needed public safety
services
• Save family farms by keeping land in families for generations to come
• Reduce market and grid costs for utilities
• Save money for consumers and businesses in Pennsylvania with low-cost energy.
©2021 13Questions? Contacts: Zander Bischof, zander.bischof@ccrenew.com Matt Kozey, matt.kozey@ccrenew.com
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