Report: What Is Solar Power Worth?

A report ordered by the Maine Legislature may have raised more questions than it answered about how the state should proceed with solar.

by / August 7, 2015
Built with $31 million in federal stimulus funding, the five mega-watt solar farm will be the largest solar installation in Tennessee when it is completed later this year.

A new study released by the Maine Public Utilities Commission (PDF) has energy aficionados asking: What’s solar power worth? The report valued distributed solar power at $0.33 per kWh, well above the cost of Maine’s centrally generated electricity, which goes for $0.13 per kWh. A blog post on RMIOutlet examined the study and what it means for Maine and the clean energy movement at large.

There are many variables that go into calculating energy costs, such as: avoided energy costs, avoided generation capacity costs, avoided transmission costs, avoided natural gas pipeline costs, costs of integrating distributed solar power to the grid, avoided distribution costs, the value of voltage regulation, avoided pollution displacement value, market price response and avoided fuel price uncertainty.

There's no consensus on how these variables ultimately impact the market and consumer electricity costs, the post states, but a more precise understanding of the data is emerging.

“We constantly work to improve these values and use accumulated knowledge to gain a more precise understanding of value,” said study author Karl Rábago. “Values that we only hypothesized when the first value of solar studies were done, not 10 years ago, are now being characterized and quantified reliably.”

The Maine Legislature, the authority that ordered the study, is now deciding how the information contained in the study will guide future policy around solar. The state may join Austin Energy in enacting a value-of-solar tariff. Another possibility for the state is the creation of “standard buyer” market mechanism, which buys solar energy from many sources at different rates, and equalizes cost for the markets.

What Maine decides remains to be seen. One thing that is more sure is that as the technology evolves, the cost of solar will continue to drop. One report predicts a 40 percent solar cost reduction in the next two years.