Jessica PirroNovember 1, 20194980
A growing trend in the solar power industry is utility-scale solar panel installations. Utility-scale solar panel installations have been creating reliable, clean solar electricity with a stable fuel price for more than two decades. Solar power plants can be developed in a way that balances the environmental benefits of solar energy with energy demands and climates goals.
The primary defining characteristic of the utility-scale solar power is that the projects sell the solar electricity being generated by the solar-powered systems back to the electric grid. Often, utility-scale solar energy projects are described as being “in front of the meter” as opposed to distributed generation solar-powered systems, which are considered “behind the meter”. i.e. a solar-powered system that is paired with the energy load of a facility and supplies that facility directly with solar power. Beyond these key features, what has considered utility-scale solar energy is highly nuanced and determines by several factors which include the size, location, interconnection type and voltage, state policy, and their solar power is ultimately sold.
One of the best examples of the challenge in defining utility-scale solar panel installations is “Community Solar”. Community solar connects in front of the meter and will often have a larger solar-powered system size than traditional Distributed Generation, but still isn’t going to be considered utility-scale solar power. In most solar energy markets, community solar panel installations are going to fall under the state’s net metering program, just like the “behind the meter” solar energy projects.
The Solar Energy Industries Association (SEIA), a leading trade group for solar energy developers, defines a project as utility-scale in the solar-powered system that generates greater than 1 megawatt (MW) of solar energy. The National Renewable Energy Laboratory (NREL) uses a 5 MW threshold to qualify utility-scale solar energy projects. But, the size-based definitions that are used by SEIA and NREL aren’t going to provide a full answer, because most of the time, the size requirements for utility-scale solar power projects depend on the market in which the solar panel installation is being built. In some markets, the threshold is 2 MW and up, in others, it’s as high as 25 MW or higher.
For Urban Grid, utility-scale solar energy projects are 20 MW or larger, which is going to be enough solar electricity to power thousands of home or major manufacturing facilities. Our definition of utility-scale solar power is driven primarily by the business opportunity. Unlike “behind the meter” solar electricity projects that can offset the retail electricity rate, projects 20 MW and above are almost always going to be required to compete in the wholesale power markets with other “merchant” generators like coal and natural gas.
Two Types of Electricity Markets
Another factor that will help determine if a solar panel installation is going to be utility-scale is the market design. At a high level, there are two types of wholesale electricity markets: Regulated Markets and Deregulated Markets.
Regulated Wholesale Power Markets
Regulated powered markets, like those in the Southeast, are constrained by vertically integrated monopoly utilities. In these markets, utilities will generally own and operate all of the generators, transmission lines, and distribution networks which will take electricity from the power plants and deliver them to homes and businesses. In certain cases, the utilities will buy power directly from sources of renewable energy projects. In the regulated markets, the utilities, and to a certain extent the Public Service Commission, sets the definitive markers for utility-scale versus not utility-scale solar panel installations.
Deregulated Wholesale Power Markets
Deregulated power markets are competitive, organized electricity markets. The power that’s generated becomes part of the wholesale electricity market where it’s traded like any other commodity. These electricity grids, which as are also known as Regional Transmission Organizations (RTOs) or Independent System Operators (ISOs) are considered to be interconnected, which allows for broad-based trading of electricity across geographies. In these markets, there is an opportunity for financially settled VPPA’s and other unique offtake structures for utility-scale sources of renewable energy. Territories such as PJM and MISO stretch across multiple states and allow power generators to sell energy at the market price for that solar electricity. Because of this structure, utility-scale solar energy projects like those that Urban Grid develops must be of a certain size and be built efficiently to reduce the cost of the energy to a point where it’s competitive with other generators in that market.
Fun Facts About Utility-Scale Solar Energy
- There are nearly 37,000 megawatts (MW) of utility-scale solar power projects currently operating, with another 74,000 MW that are under development.
- Utility-scale solar energy can be paired with energy storage to manage evening ramps, provide backup power, and more.
- Of the utility-scale solar electricity contracts signed in 2018, only 11% were under a mandated source of renewable portfolio standard, while more than 80% of solar electricity projects were signed under voluntary procurement by a utility or corporate off-taker.
Utility-Scale Solar Power
By enacting federal policies to accelerate the growth of utility-scale solar energy, we can create jobs nationwide and quickly diversify American’s energy portfolio. Developing utility-scale solar power is one of the fasted ways to reduce carbon emissions and put the United States on a path to clean solar energy future.
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