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The american Solar Electric Power Association (SEPA) headquartered in Washington, DC, has released a new report, the utility procurement study: "Solar Electricity in the Utility Market", the first in a series of research reports to be released in 2009. This report, which is aimed at improving large scale solar acquisition by electric utilities, provides innovative ideas for future project procurement, the organization reports in a press release. In 2008, over 5,000 megawatts (MW) of new photovoltaic 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 also allows electric utilities to utilize 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.
Federal stimulus package for renewable energy
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 very dramatic as well, SEPA emphasizes in the press release.
Improvements during early stages of project planning
"The past year was marked by an unprecedented number of announcements for new large-scale solar power projects", said Julia Hamm, SEPA's executive director. "A significant investment of time and resources by both utilities and solar companies goes into a solar project's initial development. Current practices and procedures such as requests for proposals, negotiations and contracting occur behind the scenes, but are critical to the overall success of new solar generation. This report targets improvements during these early stages of project planning by identifying areas of common expectations and understanding between the two industries."
Innovative procurement ideas
According to the press release 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 (RFP) by utilities, to which solar project developers respond. Responses are then internally scored and selected by utility staff and, after negotiations are completed, a contract with a specific company emerges. The second part of the report looks at 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.
New ideas for utilities that look outside the box
SEPA's Director of Research and Education, Mike Taylor, explains: "Some of these innovative ideas have been tried, and the report details their successes and drawbacks. Other practices that are examined may have been used in solar acquisition, but perhaps not at the utility scale, or not in power plant development directly. The report provides new ideas to utilities that might be willing to look outside the box as they engage with these exciting and rapidly developing companies and technologies."
The annual series of research reports is one of SEPA's many educational programs which bridge electric utilities, solar companies, and other stakeholders to push solar forward more tangibly, one real business at a time while making solar practical and profitable in today's shifting energy landscape, the organization reports in the press release.
The full 117-page report is available for download at www.solarelectricpower.org.
Picture Courtesy: SEPA
