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Photovoltaics: A Dispatchable Peak-Shaving Option

Fortnightly Magazine - September 1 1995

indicates. Because the magnitude of distributed benefits is extremely site-specific, we chose a conservative value of $150 per kilowatt-year, based on results from five case-studies that estimated the value of distributed benefits for PV technologies. The full 16.3-Kw credited capacity of the system was used to determine total distributed benefits over the 25-year life of the system. In addition, an environmental benefit was calculated by using the value of sulfur dioxide allowances being traded under the 1990 Clean Air Act Amendments ($250/ton). We assumed that the utility would offer these nontraditional benefits to the customer as a rebate for investing in PV-DSM, with the customer using the rebate to reduce the amount of money that it borrowed from the utility. Under this arrangement, PV-DSM would be cost-effective (benefit/cost ratio equal to 1.06) for commercial customers located in the DP&L service territory.

The third scenario considers the impacts of technological improvements and PV-system cost reductions on the economic viability of PV-DSM. In particular, the PV

AC-conversion efficiency was assumed to increase from 10 to 15 percent, while the cost of the PV array would decline by one-third (from $85,000 to $57,000, storage not included). The efficiency gain would result in more peak-shaving capacity from the 105 m2 PV array assumed in our analysis (the system would now have a credited peak-shaving capacity of 25.6 Kw, and a rated capacity of 15.75 Kw). Under these assumptions, PV-DSM would be cost-effective even without a utility contribution.

Our analysis suggests that PV-DSM is technically feasible and near commercial viability. In the case of a dispatchable PV-DSM application in a strategic site, the estimated benefits of a utility-customer partnership can equal 100 percent or more of the current costs for an installed system. Through increased module efficiency and cost reductions in major PV system components, dispatchable PV systems could emerge as cost-effective DSM options for commercial buildings, without the need for a utility contribution. The continued movement toward real-time electricity pricing will also enhance the competitiveness of the PV-DSM application discussed here.

Although the analysis presented here is based on one utility's experience, the results can be readily transferred to other utilities located across the country. Perez et al. (1993) have calculated the Effective Load Carrying Capability (ELCC), a statistical measure of

effective capacity, for PV systems located in numerous utility service territories across the country. They measured an ELCC of 49 percent for a fixed-tilt PV array located in DP&L's service territory, but found that several utilities located in other regions of the country have even higher ELCCs. For example, Consolidated Edison Co. and Pacific Gas & Electric Co. have ELCCs (for fixed-tilt PV arrays) of 68 and 64 percent, respectively. Thus, PV-DSM systems located in the service territories of these utilities would probably perform even better than systems located in DP&L's service territory.

In addition, since DP&L's demand and energy charges for commercial customers are near the average of the utility industry, the economics for customer-owned systems would be even more favorable for utilities with above-average demand and energy charges. Furthermore, DP&L's avoided costs are