Distributed Renewable Energy Operating Impacts and Valuation Study

Section 6
Table 6-1
Levelized Carrying Charge by Functional Sector
Distribution
System
Transmission
System
Generation
System
All Years 12.06% 11.84% 11.79%
These carrying charges were used along with the capacity investment savings developed in the
previous sections of the Report to estimate annual values associated with the avoided or deferred
capital investment costs in the distribution, transmission, and generation sectors resulting from
solar DE deployment. These annual capacity values were totaled for each sector and were then
added to the annual energy and O&M savings for each target year in the Study.
It is possible that a reduction in capacity value can be particularly important in this analysis when
the location can be defined and, thus, directly decrease the need for system improvement,
removal of constraints or new construction. The ability and desirability of installing solar DE in
strategic locations can potentially make a significant difference in the value of the solar DE
deployment.
For example, under certain conditions, solar DE systems can affect savings both on energy and
capacity value if located on a feeder with a known constraint. However, identifying specific
feeders that have the ability to support the required amount of solar DE within APS’s service
territory could be challenging. This is because the characteristics of the customer types on the
feeder typically vary from block to block. Targeting these customer types to install sufficient
solar DE may be difficult.
In addition, storage capability had a notable impact on capacity value. SHW can be used to lower
line losses and can defer some capacity generation needs, thus offering additional value to the
utility. However, this value declines as the weather warms since the difference between
incoming water temperature and the desired heated water temperature diminishes.
6.3.4 Total Annual Savings and Present Value of Savings
Annual energy, O&M and capacity savings values for all three sectors were calculated in the
target years of 2010, 2015, and 2025. Each of these sector values were then added together to
determine the total utility savings estimated to occur in these target years under the various solar
DE deployment scenarios. These estimates are presented in both inflation-adjusted (2008 dollars)
and nominal (escalated for inflation) terms. These tables provide ranges for the annual savings
that would occur under various solar DE deployment scenarios.
The present value of these future energy and capacity savings as of the end of 2008 was
calculated using APS’s discount rate. This provides a range for the current economic values of
the solar DE deployment options. More specifically, it represents a range of the estimated present
value for the solar DE deployment scenarios that incorporates uncertainties associated with the
various assumptions and time periods for solar DE deployment considered.
A more detailed technical discussion of the methodology and specific calculations used in the
assessment of the value of solar DE deployment in provided in Appendix N.
6-6 R. W. Beck, Inc. Arizona Public Service