"Solar Electricity in the Utility Market" Report

Jan. 28, 2009
The Solar Electric Power Association (SEPA) announced the release of a new report, Utility Procurement Study

The Solar Electric Power Association (SEPA) announced the release of a new report, Utility Procurement Study: Solar Electricity in the Utility Market, the first in a series of research reports to be released in 2009. The report, which is aimed at improving large scale solar acquisition by electric utilities, provides innovative ideas for future project procurement. The full report is available for download at www.solarelectricpower.org.

In 2008, over 5,000 megawatts of new photovoltaic and concentrating solar power projects were announced, and with the 8-year extension of the federal investment tax credit (ITC), the market is expected to grow significantly. Along with the tax credit extension, the revised ITC also allows electric utilities to utilize the credit for the first time, by both owning and/or investing in solar projects, potentially creating a critical source of new projects and capital financing during the current economic downturn. The effect of the ITC extension-combined with the expansion of global solar manufacturing, rapidly declining costs and price curves, and federal and state environmental policies lays a foundation for utility solar innovation at unparalleled scales. In addition, the potential effect of the new administration's stimulus package with an emphasis on renewable energy is anticipated to be very dramatic as well.

The new research report is based on the results of two studies; one conducted to explore traditional methods for the procurement of large-scale solar electricity by the utility market, and a parallel study to explore innovative methods of solar acquisition. The first part of the report dissects the traditional procurement process, which involves the release of a standard request for proposals (RFP) by utilities, to which solar project developers respond. Responses are then internally scored and selected by utility staff and, after negotiations are completed, a contract with a specific company emerges. The second part of the report looks at innovative procurement ideas, ranging from aggregation of purchasing power by utilities to interactive auctions where pricing response could be more dynamic than a single bid process. SEPA's Director of Research and Education, Mike Taylor, explains, "Some of these innovative ideas have been tried, and the report details their successes and drawbacks.”

The annual series of research reports is one of SEPA's many educational programs which bridge electric utilities, solar companies, and other stakeholders to push solar forward more tangibly, one real business at a time while making solar practical and profitable in today's shifting energy landscape.

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