As the U.S. electric power industry unbundles, the industry and its regulators grapple with two big questions concerning the degree to which distribution services should be unbundled. First, what...
Photovoltaics: A Dispatchable Peak-Shaving Option
sizing the battery bank so that it can be comfortably charged by the morning sun available on a peak demand day (this is done by using a "worst case" peak demand day as the reference case), the system can deliver reliable peak-shaving capacity to utilities. In the Mid-Atlantic region, for example, a system incorporating a 10-kilowatt (Kw) PV array can consistently provide 16.3 Kw of power for a four-hour period during summer months, with only a modest amount of storage capacity (the equivalent of 50 kilowatt-hours (Kwh)) (see Figure 1).
During the four-hour dispatch period, 30 percent of the load reduction achieved by the
PV-DSM system comes from current output of the PV array and 70 percent from the stored PV energy. If, however, the system were required to be dispatched for five hours (for example, from 1:00 p.m. to 6:00 p.m., DST), it could only deliver 13.0 Kw of peak savings. Because the system is designed to fully charge its batteries between 7:30 a.m. and 1:00 p.m., it can be dispatched during consecutive peak days. Experiments conducted at DP&L during the summers of 1993 and 1994 demonstrated the system's ability to meet "back-to-back" dispatching requirements.
We conducted a net present value (NPV) analysis to estimate the value of dispatchable, peak-shaving PV-DSM systems for both utilities and customers. If a utility were to purchase such a system, the benefits would equal the avoided cost of additions to conventional peak generating capacity (the value typically used in cost-benefit analyses for conventional DSM programs). While it may tend to overestimate the benefit in some cases, avoided cost is the appropriate reference case for capacity-constrained utilities that find themselves obliged to either build additional generating capacity or invest in DSM measures. Thus, the avoided cost of conventional peak generating capacity represents the level of investment in PV-DSM that utilities would be willing to make.
If a commercial customer chose to purchase a PV-DSM system, its direct benefit would equal the reduced monthly demand and energy charges resulting from operation of the PV-DSM system. Bill savings represent real monetary gains that would accrue to customers at prevailing electricity prices. Under customer ownership of the PV system, bill savings could represent a net cost to the utility in the form of "lost revenue."
Table 1 summarizes the NPV of benefits and costs for each ownership option if a PV-DSM system were sited in DP&L's service territory. A credited capacity value of 16.3 Kw was used for a system that combines a 10-Kw PV array with 50 Kwh of battery storage based on ground source measurements of irradiance matched to utility peak load during Summer 1992. In the case of utility ownership, a benefit-cost ratio indicates that only 66 percent of current costs can be covered by the benefits of a peak-shaving PV system.* The utility receives total NPV benefits of $95,940, compared to NPV costs of $145,170. The NPV costs for the utility consist of three components: capital costs, operations and maintenance (O&M) costs, and carrying charges. Capital costs include $8,500/Kw for the PV array, power-conditioning system