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Maine Distributed Solar Valuation Study

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Maine Distributed Solar Valuation Study Maine Public Utilities Commission Maine Distributed Solar Valuation Study Revised April 14, 2015 Maine Public Utilities Commission Mark A. Vannoy, Chairman David P. Littell, Commissioner Carlisle J.T. McLean, Commissioner Project Staff Mitchell M. Tannenbaum, Acting General Counsel Dr. Jason N. Rauch, Utility Analyst Stuart G. O’Brien, Staff Attorney Prepared by Benjamin L. Norris and Philip M. Gruenhagen Clean Power Research, LLC Robert C. Grace and Po‐Yu Yuen Sustainable Energy Advantage, LLC Dr. Richard Perez Karl R. Rábago Pace Law School Energy and Climate Center Maine Distributed Solar Valuation Study Note on Edition This edition is an updated and revised version of the March 1, 2015 report delivered to the Maine Legislature and incorporates changes and clarifications further described in the March 25, 2015 addendum. Legal Notice from Clean Power Research This report was prepared for the Maine Public Utilities Commission by Clean Power Research. This report should not be construed as an invitation or inducement to any party to engage or otherwise participate in any transaction, to provide any financing, or to make any investment. Any information shared with Maine Public Utilities Commission prior to the release of the report is superseded by the Report. Clean Power Research owes no duty of care to any third party and none is created by this report. Use of this report, or any information contained therein, by a third party shall be at the risk of such party and constitutes a waiver and release of Clean Power Research, its directors, officers, partners, employees and agents by such third party from and against all claims and liability, including, but not limited to, claims for breach of contract, breach of warranty, strict liability, negligence, negligent misrepresentation, and/or otherwise, and liability for special, incidental, indirect, or consequential damages, in connection with such use. Page i Maine Distributed Solar Valuation Study Table of Contents TABLE OF CONTENTS .......................................................................................................................................... II EXECUTIVE SUMMARY ....................................................................................................................................... 1 BACKGROUND ............................................................................................................................................................... 2 VOLUME I – METHODOLOGY ............................................................................................................................................ 3 VOLUME II ‐ VALUATION RESULTS ..................................................................................................................................... 4 First Year Value ..................................................................................................................................................... 4 Environmental Results .......................................................................................................................................... 5 Long Term Value ................................................................................................................................................... 5 VOLUME III ‐ IMPLEMENTATION OPTIONS ........................................................................................................................... 7 Objective ............................................................................................................................................................... 7 Solar Implementation Options .............................................................................................................................. 8 Solar Implementation in Maine .......................................................................................................................... 12 Solar Implementation in Other States: Key Themes and Lessons Learned .......................................................... 12 Other Considerations for Solar PV Implementation ............................................................................................ 13 VOLUME I: METHODOLOGY ............................................................................................................................... 14 INTRODUCTION ............................................................................................................................................................ 15 Methodology Overview ....................................................................................................................................... 15 Competitive Market Structure in Maine ............................................................................................................. 16 Methodology Objectives ..................................................................................................................................... 16 Value Components .............................................................................................................................................. 17 Solar Penetration ................................................................................................................................................ 19 Marginal Fuel ...................................................................................................................................................... 19 Economic Analysis Period .................................................................................................................................... 19 Maine’s Electric Utility Territories ....................................................................................................................... 19 High Value Locations ........................................................................................................................................... 20 METHODOLOGY: TECHNICAL ANALYSIS ............................................................................................................................. 22 Load Analysis Period ........................................................................................................................................... 22 PV Energy Production .......................................................................................................................................... 22 Load‐Match Factors ............................................................................................................................................ 24 Loss Savings Analysis .......................................................................................................................................... 26 METHODOLOGY: ECONOMIC ANALYSIS ............................................................................................................................. 28 Discount Factors .................................................................................................................................................. 28 Avoided Energy Cost ........................................................................................................................................... 29 Avoided Generation Capacity Cost ...................................................................................................................... 30 Avoided Reserve Capacity Cost ........................................................................................................................... 30 Avoided Natural Gas Pipeline Cost ...................................................................................................................... 30 Solar Integration Cost ......................................................................................................................................... 31 Avoided Transmission Capacity Cost ................................................................................................................... 32 Avoided Distribution Capacity Cost ..................................................................................................................... 33 Voltage Regulation ............................................................................................................................................. 34 Avoided Environmental Costs ............................................................................................................................. 34 Market Price Response ........................................................................................................................................ 36 Page ii Maine Distributed Solar Valuation Study Avoided Fuel Price Uncertainty ........................................................................................................................... 39 APPENDIX 1: AVOIDED DISTRIBUTION CAPACITY COST ......................................................................................................... 41 APPENDIX 2: AVOIDED NATURAL GAS PIPELINE COSTS ........................................................................................................ 46 VOLUME II: VALUATION RESULTS ...................................................................................................................... 47 SOLAR VALUATION RESULTS ........................................................................................................................................... 48 Long Term Value ................................................................................................................................................
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