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52 MICROPOWER: THE NEXT ELECTRICAL ERA REWIRING THE MARKET RULES 53 lators approved prior to competition—exit fees, and stand-by charges that, combined with requirements for utility grid interconnection, could as much as double the cost of small- scale power.118 Distribution utilities, which remain regulated monopo- lies under the current restructuring, often erect roadblocks to micropower because regulators generally tie profits to the amount of electricity delivered, making small-scale genera- tion on the customer side of the meter a perceived threat. But these steps could ultimately hurt utilities by leading to “wire-cutting” as frustrated users find they can get less expensive, more reliable power by installing generators off the grid. To give distribution utilities an incentive to support micropower, regulators can cap revenues from power deliv- ery and offer credits for improving reliability. Policymakers can also smooth the way for small-scale systems by setting cost limits on fees and charges for users, or even waiving them, and by establishing time limits for the approval of new micropower generators.119 Other policies to support a micropower system involve the standardization or elimination of siting and permitting requirements and emissions regulations that were established when small-scale power was not an option. Micropower is not accounted for in the building, electrical, and safety regu- lations in most industrial nations; local code and zoning offi- cials tend to be unfamiliar with the technology. Homeowner associations concerned about lower property values often retain restrictions on modifications such as solar roofing well after developments have been completed. Land use planning and zoning laws favor the right to build over the “solar access” of neighboring property owners. Environmental reg- ulations do not fully credit the pollution-reduction gains of small-scale systems, and sometimes exempt their older, dirti- er competitors. These are problems that can be addressed through clear performance standards.120 Joseph Iannucci of Distributed Utility Associates identi- fies 10 “market accelerators” for micropower, concluding that if electric utilities do not take the lead in promoting dis- TABLE 10 Eight Barriers to Micropower • Higher initial capital costs • Ownership rules • Customers not rewarded for relieving peak load • Impacts on local reliability ignored • Unfair standby charges, exit fees, transition costs • Burdensome interconnection requirements • Discriminatory permitting, fire, building, and other codes • Inequitable emissions policies Source: See endnote 114. metering” programs that permit PV system owners to run their meters backwards.116 As policies like net metering become more common, it will be important to standardize the requirements that exist for safely and reliably interconnecting power systems with the distribution grid. In many regions, utilities impose a melange of complicated requirements that typically increase the cost of installing a small-scale system by several thousand dollars. Many of these standards, furthermore, vary from utility to utility, making it difficult for a manufac- turer to plan for a regional or national market. In January 2000, the Institute of Electrical and Electronics Engineers approved standards designed to simplify the process for PV interconnection with the grid.117 Complex power purchase agreements and discrimina- tory charges pose other barriers to fair competition. Local utilities often require small-scale system owners to sign lengthy agreements that are designed for systems in the range of hundreds of megawatts and thus deter installation. Utilities also commonly impose stranded-asset charges— which compensate utilities for uneconomic plants that regu-PDF Image | Micropower: The Next Electrical Era
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