NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

The Treatment of Solar 

Generation in Electric Utility 

Resource Planning

NREL Webinar

Karlynn Cory, John Sterling, 

Mike Taylor, and Joyce McLaren

January 14, 2014

NREL/PR-6A20-60946
2

Logistics

• Participants are joined in listen-only 

mode.

• Use the Q&A panel to ask questions 

during the webinar. We will hold all 

questions until the end of the webinar.

o To ask a question:

– Click Q&A at the top of the Live 

Meeting Window

– Type your question in the Q&A box

– Click “Ask” to send question

• The webinar is being recorded and a link 

will be sent to all online participants once 

it is available.

Photo by City of San Jose, NREL 19492 

Photo by SunPower Corporation, NREL 23816
3

Disclaimer

DISCLAIMER AGREEMENT

These information (“Data”) are provided by the National Renewable Energy Laboratory (“NREL”), which is operated by the Alliance 

for Sustainable Energy LLC (“Alliance”) for the U.S. Department of Energy (the “DOE”).

It is recognized that disclosure of these Data is provided under the following conditions and warnings: (1) these Data have been

prepared for reference purposes only; (2) these Data consist of forecasts, estimates or assumptions made on a best-efforts basis, 

based upon present expectations; and (3) these Data were prepared with existing information and are subject to change without

notice.

The names DOE/NREL/ALLIANCE shall not be used in any representation, advertising, publicity or other manner whatsoever to 

endorse or promote any entity that adopts or uses these Data. DOE/NREL/ALLIANCE shall not provide any support, consulting, 

training or assistance of any kind with regard to the use of these Data or any updates, revisions or new versions of these Data.

YOU AGREE TO INDEMNIFY DOE/NREL/ALLIANCE, AND ITS AFFILIATES, OFFICERS, AGENTS, AND EMPLOYEES AGAINST ANY CLAIM 

OR DEMAND, INCLUDING REASONABLE ATTORNEYS' FEES, RELATED TO YOUR USE, RELIANCE, OR ADOPTION OF THESE DATA FOR 

ANY PURPOSE WHATSOEVER. THESE DATA ARE PROVIDED BY DOE/NREL/ALLIANCE "AS IS" AND ANY EXPRESS OR IMPLIED 

WARRANTIES, INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A 

PARTICULAR PURPOSE ARE EXPRESSLY DISCLAIMED. IN NO EVENT SHALL DOE/NREL/ALLIANCE BE LIABLE FOR ANY SPECIAL, 

INDIRECT OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES WHATSOEVER, INCLUDING BUT NOT LIMITED TO CLAIMS 

ASSOCIATED WITH THE LOSS OF DATA OR PROFITS, WHICH MAY RESULT FROM AN ACTION IN CONTRACT, NEGLIGENCE OR OTHER 

TORTIOUS CLAIM THAT ARISES OUT OF OR IN CONNECTION WITH THE USE OR PERFORMANCE OF THESE DATA.

This work was supported by the U.S. Department of Energy under Contract No. DE-AC36-08-GO28308 with the National Renewable Energy Laboratory.
4

Overall Goals of this Webinar

Attendees will learn:

• How utilities conduct resource planning activities

• The benefits and challenges of incorporating solar 

generation into the resource planning processes

• Potential analysis options for more accurately 

incorporating solar generation into utility long-term 

planning processes

• Utility analysis needs that would better inform solar 

supply planning.

 Based on interviews with 13 entities (including 9 utilities) 

and a questionnaire with 28 utilities (22 states)
5

Speakers

John Sterling

Director – Utility Programs 

& Planning 

SEPA

Karlynn Cory

Manager – Technology 

Systems & Utility Analysis

NREL

Mike Taylor 

Director of Research

SEPA

Joyce McLaren

Senior Energy Analyst

NREL
6

Who is NREL?

NREL’s Mission: Only National Laboratory Dedicated 

Solely to Energy Efficiency and Renewable Energy

Energy Efficiency Renewable Energy Systems Integration Market Focus

Residential 

Buildings 

Commercial 

Buildings

Personal and 

Commercial 

Vehicles

Solar

Wind and Water

Biomass

Hydrogen

Geothermal

Grid 

Infrastructure

Distributed 

Energy 

Interconnection

Battery and 

Thermal Storage

Transportation

Private Industry

Federal Agencies

Defense Dept.

State/Local Govt.

International
7

Who is SEPA?

SEPA is an educational non-profit (501 c3)

Membership Utilities 

Joint Action 

Agencies, 

G&Ts, RTOs, 

FPAs

Wholesale 

Marketers, 

IPPs

Manufacturers

Project 

Developer/ 

Installer/ 

Distributors

Business and 

Professional 

Services

Affiliates

Researching and disseminating unbiased 

information and solutions to 1,000 

members and the public focused on 

utility-solar nexus

430+

Utility

52% of 

electricity 

customers

+90% 

of installed 

solar 

capacity

460+ 

solar 

industry & 

stakeholder
8

Photo by Dennis Schroeder, NREL 21771

WHY ARE WE HERE?
9

Treatment of Solar Generation in

Electric Utility Resource Planning

• Understand utility solar supply planning 

methods, models, and approaches

• Build awareness, capture challenges, 

and identify solutions for:

− Approach to long-range resource planning

− Methods and tools for conducting resource 

planning

− How solar is considered in the resource 

planning process

• Method:

o Interviewed 13 entities, including 9 utilities

o Questionnaire with 28 utilities (22 states)

• Report issued on October 31, 2013

o http://www.nrel.gov/docs/fy14osti/60047.pdf.
10

Photo by Dennis Schroeder, NREL 21771

UTILITY SUPPLY PLANNING 

“CRASH COURSE”
11

Integrated Resource Planning

Resource planning balances supply-side and demandside resources over a long-term window to meet 

anticipated future load requirements (plus reserves).
12

Load Growth

Time Period

Average 

Annual Load 

Growth

1981 – 2005 2.3%

2006 – 2012 0.23%

2013 – 2040 (est.) 0.78%

EIA Data Utility Planning Assumptions

0 5 10 15

< 0%

0-1%

1-2%

2-3%

> 3%

Average Annual Consumption 

Growth - Net of EE/DG

Source: EIA 2013 Source: NREL/SEPA questionnaire performed

as part of this study (Sterling et al. 2013)
13

Resource Options and Availability

• Existing Assets

o Planned life

o Repair or replace

• Contracts

o End dates

o Extension options

• EE/DR/DG

o Customer adoption rates

• New Resources

o Needs identification.

Load Duration Curve Resource Considerations

Baseload

Intermediate

Peaking

MW (Capacity)

Hours

Load 

8760
14

States with RPS
15

How Utilities Conduct Long-Term Planning

• Create a series of future 

resource plans, often using 

software tools

• Take an array of 

assumptions on their 

generation fleet, growth, 

fuel costs, etc.

• Optimize future resource 

additions based on lowest 

potential revenue 

requirements.

• Limit the number of specific 

resources that can be added 

in a given window

• Set a minimum level of 

capacity or energy from a 

specific resource type

• Restrict certain resources 

from being selected

• Require a specific resource 

to be built at a point in time

• Force a plant retirement 

prior to end of book life.
16

Resource Characteristics

Plant Statistics

Nameplate MW

Summer/Winter Net 

Dependable Capacity

Capacity Value (RE only)

Construction Time

Useful Life

Plant Operating 

Characteristics

Capacity Factor

Heat Rate (combustion only)

Water Use

Emissions

Ramp Rate, Minimum Load, 

Start Times

Planned/Unplanned Outages

Plant 

Economics

Capital Cost ($/kW)

Incentives (e.g., tax credits, 

MACRS, state incentives)

Variable O&M ($/MWh)

Fixed O&M ($/kW-yr)

Integration Costs
17

Capacity Expansion Modeling

Portfolio A • Gas-heavy

Portfolio B • Exceeds compliance of RPS

• Contemplates new nuclear 

capacity Portfolio C

Example Results
18

How Utilities Conduct Long-Term Planning

• Production cost models take 

the set of future plans created 

in the capacity expansion 

process and runs them 

through an hourly dispatch 

model across the planning 

horizon (15+ years)

o Can identify fuel mix, gas burn, 

emissions, and cost information

• Utilities often run sensitivity 

analytics around key variables 

where future values are 

uncertain

• The goal here is to identify 

portfolios that are more 

robust against upward risk.

PCM 

Factors

Fossil fuel

prices

Wholesale 

market 

prices

Load

Environmental

costs

RE levels

Hydro 

availability

Energy 

efficiency

Incentive 

availability

Production Cost Modeling
19

Commonly Stressed Variables

86%

71%

33%

95%

29%

57%

48%

43%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Natural gas fuel

prices

Carbon costs Installed

capacity costs

Load Federal or state

incentives or

tax decisions

Renewable

requirement

decisions

Energy

efficiency levels

Other or

Additional

Comments

Based on SEPA-NREL utility questionnaire (21 respondents), performed as part of this study (Sterling et al. 2013).
20

Expected PVRR

95th Percentile - Expected PVRR

PVRR and Risk Tail Analysis

Risk Analytics

Source: Sterling et al. 2013
21

Production Cost Modeling: Key Metrics

Portfolio 

Selection

Present Value 

of Revenue 

Requirements

Cumulative 

CapEx

Emissions

Fuel Diversity

Water Usage

Average 

System Cost

Future Risk
22

What do utilities 

think about solar energy today?

Photo by Dennis Schroeder, NREL 22181
23

Utility Perspectives on Solar

Benefits of Solar

• Meet renewable standard 

requirements

• Fuel diversification

• Cost stability

• Geographic dispersal benefits and 

incrementality

• Partial correlation to peak 

demand

• Environmental compliance risk 

mitigation

• Avoid line losses (DG only).

Challenges of Solar

• Integration due to variable output 

(within and between years)

• Economics

• Lack of current capacity need

• Cross-subsidization

• Ramping issues (especially for DG 

that cannot be controlled by the 

utility; doesn’t provide reserves) 

• Reduced capacity benefit over 

time with increasing penetration.
24

Photo by Dennis Schroeder, NREL 21771

CONSIDERATIONS FOR IMPROVED 

INTEGRATION OF SOLAR INTO 

RESOURCE PLANNING ANALYTICS
25

Where are there gaps between utility 

practices and solar incorporation?

Photo by Dennis Schroeder, NREL 19110
26

Top Considerations

1. Estimate solar capacity value

2. Improve DG treatment in planning

3. Incorporate solar cost and performance

4. Modify how solar is analyzed in existing 

planning tools.
27

Solar Capacity Value: Utility Treatment Today

Note: Numbers in circles represent the number of utility responses

Source: SEPA-NREL questionnaire (up to 21 respondents), as part of this study (Sterling et al. 2013).
28

Capacity Value Changes Based on Penetration

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

HE1HE2HE3HE4HE5HE6HE7HE8HE9

HE10HE11HE12HE13HE14HE15HE16HE17HE18HE19HE20HE21HE22HE23HE24

MW

Impact of Increasing PV Penetration on System Peak

Load Net 100 MW Net 500 MW Net 1,000 MW Net 2,000 MW

Source: Sterling et al. 2013
29

Key Points

• Capacity Value is location-, technology-, and 

utility-specific

o No “one size fits all” value

o Utilities should perform their own analyses for 

different technology types and locations

• Capacity Value is not static

o The more solar that gets added to the system, the 

lower that incremental solar’s Capacity Value will 

be – unless storage is available.
30

Distributed Generation

• Virtually all utilities treat distributed PV as a 

net load reduction

o Simple, and at low penetration levels an 

appropriate approach

• Utilities could consider treating DG as a 

resource

o Utilities could optimize the level of DG 

included in their resource plans

o Utilities can perform sensitivity analytics 

around solar price curves.
31

Direction of Solar Costs: What We Heard

DOE SunShot 

Initiative cost 

targets are 

achievable

Costs have 

already 

stabilized

Reductions will 

continue but at a 

more gradual 

pace
32

Cost Declines: Key Focus of DOE

Non-hardware (“soft") cost-reduction roadmap for residential and small commercial solar photovoltaics, 2013-2020 (NREL/RMI Report, Aug 2013).

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

2010 2013 2014 2015 2016 2017 2018 2019 2020

WACC

$/W-dc

Residential Rooftop Soft Cost Reduction Roadmap

Hardware Customer Acquisition

Permitting, Inspection, Interconnection Installation Labor

Other Soft Costs (Profit, Overhead) Financing (WACC)
33

Solar Cost Data

• NREL’s Transparent Cost Database – utility-scale data 

http://en.openei.org/wiki/Transparent_Cost_Database

• NREL’s Energy Technology Cost and Performance Data for Distributed 

Generation http://www.nrel.gov/analysis/tech_cost_data.html

• NREL’s Open PV Project – captures voluntary historical cost and 

performance data https://openpv.nrel.gov/

• LBNL’s Tracking the Sun report http://emp.lbl.gov/sites/all/files/LBNL5919e-REPORT.pdf

• U.S. Department of Energy November Technical Report: PV Pricing 

Trends: Historical, Recent, and Near-Term Projections 

http://www.nrel.gov/docs/fy13osti/56776.pdf

• U.S. Department of Energy November Technical Report: Benchmarking 

Non-Hardware Balance of System (Soft) Costs for U.S. Photovoltaic 

Systems Using a Data-Driven Analysis from PV Installer Survey Results

http://www.nrel.gov/docs/fy13osti/56806.pdf

• Western Wind and Solar Integration Study - Phase 2 (integration costs) 

http://www.nrel.gov/electricity/transmission/western_wind.html.

Regularly

updated

Snapshots

in time
34

Solar Cost Models

Analysis Tools

• NREL’s System Advisor Model (SAM) – advanced tool for 

estimating levelized cost of energy (LCOE)

http://sam.nrel.gov/

• NREL’s Cost of Renewable Energy Spreadsheet Tool –

simplified spreadsheet tool for estimating LCOE 

https://financere.nrel.gov/finance/content/crest-costenergy-models

• NREL’s PVWatts – tool for modeling production profiles 

of solar resources at different geographic locations 

http://www.nrel.gov/rredc/pvwatts/about.html.
35

Modifying Planning Analytics

• Analyze solar on an aggregate and 

geographically dispersed basis

• Enhanced risk/uncertainty analysis methods 

and/or updated modeling software

o Ex: Ability to run sub-hourly dispatch sensitivities

• Linking supply planning to other utility 

planning, procurement, and operations 

procedures

• Solar-battery storage nexus.
36

Photo by Dennis Schroeder, NREL 21771

TAKEAWAYS
37

Project Learnings

• All utilities have some level of sophistication for modeling 

generation resources

• Utilities universally see solar as providing:

o Stable-priced energy

o Fuel diversification

o Risk mitigation for natural gas price volatility and potential future 

carbon costs

• General agreement that the future cost curve for solar will 

continue to decline, but at a flatter rate than was experienced 

over the last several years

• Some utilities are more detailed and accurate in their inclusion of 

solar (and many generalize certain aspects)

o Primary drivers: cost efficacy of utility-scale generation and robustness 

of customer-sited PV adoption.
38

Areas of Focus for Solar Analytics

Profiles matter

• The more specific the 8760 profile is to a utility’s system, the better

• Dispersing solar over wide geographic areas requires a blending of 

profiles

• Dynamic system size instead of fixed blocks can be used to fit needs 

more closely

Solar provides 

capacity value

• Utilities still analyzing the right approach to allocate capacity value 

to solar

• Utility-, site-, and technology-specific values can differ

Technology and 

design flexibility 

drives costeffectiveness

• Fixed vs. tracking

• Orientation

• Inverter clipping

Treatment of 

customer-sited 

solar

• Majority of utilities treat customer-sited solar as a net load today

• Increased penetration and transition from NEM to other models 

(like feed-in tariffs or value of solar) may warrant treating as a 

resource

Intra-hour 

dynamics

• At low levels of penetration, not a concern

• With increasing penetration, utilities may start looking at capacity 

expansion implications due to intermittency
39

Thank You!

Karlynn Cory

karlynn.cory@nrel.gov

John Sterling

jsterling@solarelectricpower.org

Mike Taylor

mtaylor@solarelectricpower.org

Joyce McLaren

joyce.mclaren@nrel.gov

Photo by Dennis Schroeder, NREL 19794