Dive Brief:
- The Tennessee Valley Authority (TVA) on Wednesday released its “Distributed Generation- Integrated Value” report — the federally-owned utility's effort to calculate the economic value of distributed solar and other generation on its grid. The report confirms that solar allows TVA to avoid costs incurred with using fossil fuels to generate electricity, but concludes that, by and large, solar costs more than the value of its avoided costs.
- Though DG advocates pushed for a full cost-benefit analysis, the report only assesses TVA’s avoided costs of not using other fuels for generation, an approach that critics say excludes grid services, environmental benefits, and grid resiliency services solar can provide.
- TVA acknowledged the draft report is a starting point for valuation and has indicated the other benefits will be considered as the stakeholder process continues.
Dive Insight:
Preliminary value streams for the report were developed from previous Value of Solar (VOS) studies by Austin Energy, Minnesota solar advocates and others. Seven solar value streams were selected to assign a value to the resource, while the study assessed environmental and other values separately.
The report considered compared solar to conventional power plants by assessing its scalability and locational versatility, along with its lower emissions and elimination of fuel costs.
The report’s calculated avoided cost to TVA for small solar PV small systems came out “below the current average retail rate in the TVA service territory, and is less than the solar rate currently being offered by TVA." But, it cautions that the report's conclusions do not include any possible outside incentives for solar beyond the avoided cost price signal.
TVA's valuation methodology (DG-IV Method) puts solar's value below what the utility currently pays for it, but not if environmental considerations are taken into account.
The price signal identified in the report “is a reasonable value on a system‐wide basis” and “represents an opportunity to explore additional incentives,” TVA said.
With the relevant solar value streams identified and a methodology for quantifying them established, the utility said the methodology of the report can be applied in subsequent efforts to evaluate new incentives or solar programs.
