Predictions 2017: 5 takes on what the new year will bring for renewable energy

Net metering 2.0 and even higher corporate demand are on the horizon, insiders say

The solar sector compelled people to stand up and take notice in 2016. Following the federal tax credit extension for rooftop solar, and falling costs in the supply chain, the resource became competitive with natural gas and coal generation.

Investments in energy storage proliferated, and more states levied requirements for more renewable energy. But on the flip side, policies historically nurturing the resource have come under fire. Net metering, a billing mechanism for excess energy sent from rooftop solar arrays, and the Public Utility Regulatory Policy Act of 1978 are facing reform efforts from utilities across the nation.

Despite these obstacles, industry insiders remain optimistic that renewable energy will continue to grow. In December, Utility Dive solicited predictions from industry experts on trends impacting the power sector in 2017. The responses indicate that despite uncertainty in federal policymaking, insiders expect utility-scale solar and commercial demand to drive renewable energy growth in the coming year.

1. Solar energy will continue to spark innovation in 2017

Anne Hoskins, Chief Policy Officer, Sunrun: As solar companies innovate to add grid services, will regulators embrace distributed solar as an opportunity to improve the grid or view it as a problem to contain? Regulators have the opportunity to facilitate collaborative initiatives between distributed energy companies and regulated utilities which can bring enhanced value and reliability to the distribution grid.

Through ongoing grid modernization and regulatory reform proceedings in states like New York, Hawaii, Minnesota, Rhode Island, DC, Massachusetts, and California, regulators can direct utilities to open their networks to new distributed technologies that can improve electric service for all ratepayers.

Innovations such as advanced solar technology, energy storage, and other smart home energy services offer a myriad of solutions for the grid of the future that will save all customers money, including frequency response, load shifting, peak reduction, reliability-based demand response, and voltage support and dispatch. On top of that, they add the societal benefits of more energy choice, cleaner air, and local jobs.

States and regulators that opt instead to fortify old networks with regressive and confusing rate designs, such as demand charges, risk foregoing the true value of distributed energy. Technology is forging ahead and competitive solar providers will work every day in 2017 to reduce costs and increase value for customers. My prediction and hope is that increasing numbers of state regulators will catch this wave of innovation as they work to advance the public interest in 2017.   

2. States will take on diverse approaches to net metering successor tariffs

Autumn Proudlove, senior analyist for NC Clean Energy Technology Center: More states and utilities will continue to take up net metering and rate design changes, yet a dominant successor policy will not emerge. While the last two years have yielded much discussion over “net metering 2.0”, we are not terribly closer to knowing what this looks like, and it’ll most likely be a different answer from state to state.

Part of this will be due to varying technical capabilities, with AMI deployment and grid modernization at different stages across the country. Part of this will also be driven by local priorities and concerns, such as the amount of solar capacity already on the grid, and inevitably, local politics. States will necessarily serve as laboratories of democracy, taking diverse approaches to net metering 2.0 in 2017, which may or may not eventually trend toward a dominant successor policy after state experiences can be evaluated and shared.

While states are unlikely to rally behind a single successor policy just yet, we should see some common themes in these upcoming net metering discussions, including movement toward more sophisticated crediting schemes (time-of-day, location-based, and value of solar or DG rates), concurrent consideration of community solar program design, and stakeholder engagement

3. Utility and corporate demand for renewables will climb in 2017

Amy Francetic, ‎senior vice president of new ventures and corporate affairs, Invenergy: Looking ahead to 2017, the shift to cleaner energy will continue. Despite expected changes in government policy, utilities have recommitted to previously announced plans to retire ailing coal plants and move their power fleets toward renewables and natural gas because it makes economic sense. In the last two months, commercial and industrial companies have announced a number of power purchase agreement deals to purchase renewable energy, and we expect contracting momentum to increase as buyers look to lock in full Production Tax Credit value during the phasedown.

Commercial and industrial buyers, like utilities, are committed to renewables because of the long-term, cost-competitive price for electricity and corporate sustainability benefits. Renewables are also a vibrant part of the U.S. economy. In fact, wind technician was the fastest growing profession in America in 2016.

As the utility sector transitions to variable generation sources, the complex patchwork of markets, regulations, policies and utility models undoubtedly creates challenges. But it also offers a large variety of existing constructs to learn from and identify proven best practices.

Ultimately, a more modern, cleaner energy system promises affordable, reliable energy as well as consumer choice, flexibility and sustainability. We predict that forward-looking businesses and American citizens will shape the energy future more than ever.

4. Utility-scale and commercial solar will see strong growth

Vikram Aggarwal, CEO and founder, EnergySage: The cost of renewables reached a critical milestone in 2016. In more than 30 countries, including the U.S., solar and wind are now cheaper sources of energy than fossil fuel-related options, according to a report by the World Economic Forum. As costs continue to drop, it’ll only become harder to justify any other source of power - putting more pressure on utilities and power producers to prepare for the new reality. This will lead to many of them adjusting their long term growth strategies in 2017.

While some may resist and despite the new administration's pro-fossil fuel policies, there’s no denying the numbers. Those utilities and energy companies that can develop an integrated, long-term business model that includes renewables, particularly distributed solar, will be best positioned for success.

In 2017, U.S solar will continue to see strong growth in commercial and utility-scale installations. As for the residential sector, we are highly optimistic that it will also thrive in 2017 and beyond, despite a slowdown in 2016. Consumer awareness and interest in rooftop solar continues to grow and solar companies will respond by aggressively offering attractive solar economics and customer-centric solar programs.

5. State policies will continue to drive the clean energy revolution

Sara Baldwin Auck, Regulatory Director, Interstate Renewable Energy Council (IREC): The strength of our foundations will be both a theme and a measure of resilience in 2017. As considerable changes permeate the federal landscape and seep into our economic, environmental, social and energy spheres, the foundations upon which historic clean energy growth has been built will be put to the test.

State and local governments will remain at the epicenter of clean energy deployment and policy innovation. Policies and regulations that served as foundations for impressive growth trends for renewables, energy efficiency and distributed energy resources (DERs) will persist as paramount. Heightened demand for fair access to advanced energy technologies, smarter systems and cutting edge innovations will accompany proposals addressing equity, consumer protection and empowerment.  

Seamlessly incorporating new DERs on the electric grid, while ensuring grid safety and reliability, will enhance the focus on the grid’s foundational functions.  We expect an uptick in new interconnection proceedings, in response to pressures and procedural challenges associated with a surge in grid-connected DERs. Revamping outdated interconnection standards and processes to align them with proven models and well-vetted procedures will be the key to avoiding grid-lock.

More states will tackle comprehensive grid modernization, shifting the focus toward optimizing DERs on the grid. “Integrated distribution planning” will gain more traction as a strategy to enable smarter DER growth. Adopting this more holistic planning approach, as begun in New York and California, will help pinpoint the most optimal locations for DERs, avoid costly upgrades to the grid, and enable non-wires alternatives.  Distribution system planning is the new frontier for efficient and cost effective DER integration; robust hosting capacity analyses along with accurate DER forecasting will be the building blocks for success.

Lastly, state commissions will continue to address the foundational issues of rate design and DER valuation. As attempts to alter net metering continue, how this core policy evolves will have ripple affects across markets, and will also impact other solar access policies, i.e., for shared renewables and multifamily solar.  

As states continue investigations of the value of DERs, enhanced pressure from all sides will encourage accuracy. In 2017 we’ll see the emergence of more granular, location-based DER pricing schemes. And we expect more states to address the bigger elephant in the room: the utility business model.

In the face of future uncertainties, may our foundations prove to be both robust and resilient.   

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Filed Under: Solar & Renewables Energy Storage Regulation & Policy
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