New Analysis from TVA Confirms Solar Has Value, But Shortchanges the Amount

Nashville, TN—Today TVA released its “Distributed Generation- Integrated Value” report, the result of a year-long stakeholder process intended to calculate the economic value that solar power provides to the TVA grid. The report confirms that by encouraging distributed solar, TVA avoids a range of costs associated with burning coal or natural gas for electricity. While the stakeholder group lacked consensus on what that range of costs should include, the process is a necessary and positive first step towards building a more robust solar market in the Tennessee Valley.

TVA embarked on this process as utilities around the country have attempted to define the “value of solar,” a formula that captures just how much customer-generated solar power is worth to the utility, other customers, and to the environment and community at large. Unlike other utilities, however, TVA chose not to consider the full range of benefits and savings when solar is used in place of fossil fuel sources, such as the impacts of pollution, carbon, and water use.

“The good news is TVA is starting to regard solar power like the valuable resource it is,” said Amanda Garcia, attorney at the Southern Environmental Law Center and a member of the stakeholder group. “But the report only looks at what TVA saves, not the value of solar to the Tennessee Valley as a whole. As a public power company, TVA should dig deeper and craft policies that do not shortchange customers who make the investment to put panels on their roofs.”

The report will inform how TVA compensates solar customers for the power they provide back to the grid. SELC and other stakeholders had encouraged TVA to calculate an economic value that reflected all benefits and savings, which initial estimates had placed at 13.11 cents/kWh—above the retail rate TVA plans to pay residential customers who participate in its Green Power Providers program in 2016. Instead, TVA focused only on avoided costs that benefit the utility directly, which in comparison is 7.2 cents/kWh over 20 years.

“This is simple math: if you don’t accurately add up the economic value of solar power, you won’t fairly compensate customers providing this resource,” commented Garcia. “TVA has taken the first step in establishing a more robust market for rooftop solar, but it is far from accurately putting a price on all the different ways solar benefits the grid.”

TVA acknowledges the draft report is a starting point and many other values will be considered as the stakeholder process continues, including solar’s environmental impacts and benefits to local power companies. The utility has also committed to updating other elements; for example, the environmental compliance value does not reflect the Clean Power Plan or other components of the rapidly changing regulatory environment surrounding fossil generation.

“We hope this provides a starting point for TVA and all stakeholders to continue working together to fairly assess solar power and design programs that benefit all who live and work in the Tennessee Valley,” said Garcia. “We look forward to engaging with TVA and the other stakeholders in the next phase of this important work.”

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About Southern Environmental Law Center:

The Southern Environmental Law Center is a regional nonprofit using the power of the law to protect the health and environment of the Southeast (Virginia, Tennessee, North and South Carolina, Georgia, and Alabama). Founded in 1986, SELC's team of over 60 legal experts represent more than 100 partner groups on issues of climate change and energy, air and water quality, forests, the coast and wetlands, transportation, and land use. www.SouthernEnvironment.org