Rising costs are a growing concern for energy consumers across the U.S., including in Iowa. For electricity customers, including residents and businesses alike, a key driver of these rising costs has been upward pressure on rates from major capital investments by incumbent investor-owned utilities. Key stakeholders representing Iowa’s business community have become increasingly concerned that cost-effective alternatives, such as distributed energy resources, are being excluded from the electric system in favor of high-cost capacity investments to meet growing electricity demand.
This report presents a detailed, independent technical analysis of one alternative, community solar, which expands solar access for Iowans who cannot install rooftop systems and delivers reliable capacity and energy value to the grid. When well-designed, community solar can benefit both participating program subscribers and non-participating electric customers, as well as address the path to a scalable community solar program.
The focus of this analysis is the value created by community solar systems that avoid the costs of conventional generation and transmission to serve customer load. By quantifying generation capacity, transmission capacity, and avoided energy value, the analysis shows that a community solar program can be designed to ensure that a) the avoided-cost value of community solar exceeds the utility’s costs, primarily the credits to participating customers, and b) the credits for participating customers exceed their costs of participation with a community solar provider. When these two conditions are met, there is an opportunity to expand a community solar program that avoids new utility investment, benefiting participating customers, non-participating customers, and solar developers.
The program design considerations presented in this report provide insight into the participation framework and compensation models. The question facing Iowa is not whether community solar creates value, but how to structure a program that is mutually beneficial.
Authors
Edward Burgess, Tim Cook, Sara O’Herron
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