A New Report From The Solar Electric Power Association (SEPA), titled “Utility Procurement Study: Solar Electricity in the Utility Market,” is the first in a series of research reports to be released in 2009. Aimed at improving large-scale solar acquisition by electric utilities, the report provides innovative ideas for future project procurement.
In 2008, more than 5,000 MW of new photovoltaic (PV) and concentrating solar power projects were announced, and with the 8-year extension of the federal investment tax credit (ITC), the market is expected to grow significantly. Along with the tax credit extension, the revised ITC allows electric utilities to use the credit for the first time by both owning and/or investing in solar projects, potentially creating a critical source of new projects and capital financing during the current economic downturn. The effect of the ITC extension, combined with the expansion of global solar manufacturing, rapidly declining costs and price curves, and federal and state environmental policies, lays a foundation for utility solar innovation at unparalleled scales. In addition, the potential effect of the new administration's stimulus package with an emphasis on renewable energy is anticipated to be dramatic.
The new research report is based on the results of two studies: one conducted to explore traditional methods for the procurement of large-scale solar electricity by the utility market, and a parallel study to explore innovative methods of solar acquisition. The first part of the report dissects the traditional procurement process, which involves the release of a standard request for proposals (RFPs) by utilities, to which solar project developers respond. Responses are then internally scored and selected by utility staff. After negotiations are completed, a contract with a specific company emerges. The second part of the report examines innovative procurement ideas, ranging from aggregation of purchasing power by utilities to interactive auctions where pricing response could be more dynamic than a single bid process.
“Some of these innovative ideas have been tried, and the report details their successes and drawbacks,” said Mike Taylor, SEPA's director of research and education.
For more information, the full report is available for download at www.solarelectricpower.org.