Advanced Energy Perspectives

NEWS: Solar and Wind's Boom Year; FERC Demand Response Case; HECO vs. Net Metering

Posted by Lexie Briggs

Jan 23, 2015 11:19:00 AM

    

Can FERC determine compensation for demand response? Can a Hawaiian utility dump net metering? Those questions are in the news this week. Plus, numbers are in, enough to show a boom in solar and wind installations in the U.S. last year.

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The Department of Justice filed an appeal to the Supreme Court to uphold the Federal Energy Regulatory Commission’s Order 745, which directed grid operators to pay for demand response services on par with power generators in wholesale markets. The D.C. Circuit Court ruled in May that FERC did not have the ability to regulate payments for demand response, citing states’ exclusive rights over retail energy markets. The Justice Department argued that Order 745 makes demand response providers “actual and integral participants” in wholesale markets, and thus subject to FERC authority.

This week, AEE hosted a well-timed webinar interview with Former FERC Chairman Jon Wellinghoff, where he argued that demand response is the glue that holds the grid together, and that it is “in no way a retail product.” Click the button below to watch our webinar archive of the interview and learn more about the controversy.

Watch the Recorded Webinar

Wellinghoff said he has “a lot of confidence” that the Supreme Court will take up the Order 745 case, and when it does, he said, “we will win hands down,” based on statutory authority and administrative precedent. 

But don’t expect resolution anytime soon. Utility Dive points out that it could be eight months or more before the Court takes up the case, and a decision would take longer. In the meantime, market uncertainty is frustrating for companies offering demand response services. 

“Everyone who plays in this market is already making Plan B for their sake and their customers,” Mei Shibata, CEO of The Energy Agency and a founding partner at Akasaka Enterprises, told Utility Dive. “When you have this type of uncertainty…it's utter confusion.”

From inside the Beltway to outside the continental U.S.: Greentech Media reported this week that Hawaiian Electrical Companies (HECO), the island state’s largest utility, will “ditch” net metering. In its place, HECO plans to institute a tariff that would make owning a rooftop solar system less valuable for consumers. HECO argues that the new tariff will make all of their utility customers pay their fair share for grid management and upkeep, as well as ensuring that distributed solar does not “crowd out” other sources of renewable energy that may cost less. Instead of refunding the all-in cost of a kilowatt-hour of electricity, the new tariff refunds solar customers at the wholesale rate adjusted based on the cost of fuel.

Net metering has become controversial in many places, but Hawaii is a special case: It is isolated from the mainland’s electrical grid and imports all of its fuel – mostly oil – at a significant premium. As a result, Hawaii has the highest electricity costs in the country. Even at wholesale rates, solar owners would get a substantial refund for excess electricity they put on the grid, helping them pay off the cost of the solar installation, but a lot less than they are getting now.

In wanting to scale back net metering, HECO is not unique. Other utilities have argued the same points, with varying results: we have previously reported on Idaho and Ohio, a potential compromise in Massachusetts, and Arizona’s proposed utility-owned option. (HECO was recently purchased by Florida-based NextEra Energy, though the net metering issue predates the sale.)

HECO argues that its proposed tariffs are part of a move toward consumer adoption of advanced energy technologies overall, because it will allow for customers to make money from energy storage, demand response, and other “self-generated power.” Check out HECO’s full filing on DocketDash.

One thing is for sure: the solar market continues to grow, not just in Hawaii.  Greentech Media reported that the U.S. installed 22 times more solar last year than it did in 2008. According to GTM, a new solar installation is completed every two minutes and 30 seconds

Solar is not alone! A new report out from BNEF states that U.S. wind installations grew sixfold in 2014, with 4.7 GW of wind capacity added last year alone. The wind installation bump resulted from extension of the Production Tax Credit in January 2013, which allowed qualification for PTC for projects that “commenced construction” by the end of that calendar year, and those projects continue to be installed. Deployment should continue into 2015.

Topics: News Update

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