June 1, 2022

What Does ‘Utility-Scale Solar’ Really Mean?

What Does ‘Utility-Scale Solar’ Really Mean?

Utility-scale solar facilities generate solar power that feeds into the grid. With electrical prices currently rising in most parts of the United States, more organizations are looking at utility-scale solar to meet their electricity needs.

The term “utility-scale” refers to any electrical plant large enough to impact the operation of a public utility. Whereas the operation of a single photovoltaic panel on a residential rooftop would have no impact on the operation of a large-scale power network, a utility-scale solar facility could most definitely have an impact.

Unlike distributed solar, which involves smaller projects that generate energy for users like residential homeowners and small building owners, utility-scale solar facilities are larger in size. They generate and sell electricity to wholesale buyers.

With more than 37,000 megawatts of utility-scale solar projects currently operating in the United States, with another 112,000 megawatts under development, utility-scale solar is a topic that’s top of mind for every solar engineering company in 2022.

Distinguishing Characteristics of Utility-Scale Solar

Utility-scale solar plants utilize multiple solar technologies. The primary technology is photovoltaic panels or concentrating solar power.

Unlike distributed generation, the electricity generated by utility-scale solar is typically sold to wholesale utility buyers through net metering. Net metering is when generated power is used on-site and excess power is fed into the grid or purchased by a utility on a per-kilowatt-hour basis.

Each state has its own net metering regulations, and there is a maximum size at which solar facilities cannot exceed to be eligible for net metering.

History of Utility-Scale Solar

The concept of utility-scale solar has been around for some time, but growth in the sector really took off in the last decade. Previously, solar facilities were almost universally built in uninhabited desert areas and other isolated or remote locations.

Now, more than a decade after utility-scale solar first went mainstream, these projects are popping up all throughout the United States. Utility-scale projects are regularly built on agricultural lands and other inhabited locations. A 5-megawatt solar facility known as Sunset Reservoir is installed in San Francisco, one of the country’s largest cities.

Over the years, the definition of what counts as a “utility-scale” project has evolved. In the late 2000s, almost every solar engineering company would have included only those facilities larger than 50 megawatts when describing this type of project. The Ivanpah solar farm, near the California and Nevada border, is an incredible 377-megawatt facility. However, in the years since, there has been a push to include smaller facilities.

Today, it’s no longer unheard of for 5-megawatt solar facilities to be described as utility-scale solar projects. The Solar Energy Industries Association has adapted its definition to include anything greater than 1-megawatt as a utility-scale solar facility.

Benefits of Utility-Scale Solar

Utility-scale solar delivers many benefits over competing systems, however price is by far the biggest factor for most organizations. Utility-scale solar has delivered stable fuel prices for years, along with a small carbon footprint. Wholesale buyers enjoy fixed-price electricity during peak demand periods, when electricity costs from fossil fuels are at their highest.

Nearly every utility-scale solar facility built by a solar engineering company in 2022 is designed with energy storage capacity, which provides power even during dark or cloudy periods with minimal daylight. This feature increases reliability and resiliency in the electrical grid.

In terms of the public good, utility-scale solar projects provide jobs across the supply chain, from engineering and manufacturing, all the way to R&D, project finance, and construction.

To sum up, the primary benefits of utility-scale solar are:

  • Lower energy costs
  • Fixed pricing
  • Increased resiliency in the electrical grid

Long-Term Outlook for Utility-Scale Solar

Solar prices have dropped dramatically in the last 10 years, making utility-scale solar a more realistic option for a greater number of organizations and municipalities. In the coming years, demand for this option is expected to grow exponentially.

The Public Utility Regulatory Policies Act (PURPA)

Although the Public Utility Regulatory Policies Act (PURPA) was enacted by Congress back in 1978, it continues to be a major driver of growth within the solar sector. The Act was designed to encourage fuel diversity through alternative energy sources and bring more competition to the sector. Today, every top solar engineering company is taking advantage of the benefits provided through PURPA to make utility-scale solar development a more cost-effective option.

Power Purchase Agreements (PPA)

Existing federal acquisition laws limit the executive branch’s authority to enter into long-term clean energy contracts. Federal agencies are not currently able to enter into Power Purchase Agreements (PPA) with terms longer than 10 years. This limitation hinders the government’s ability to fund many valuable utility-scale solar projects, including those that would be managed by a top solar engineering company.

In recent years, members of Congress have signaled they would be open to making a change to this existing limitation. Extending the executive branch’s long-term clean energy contracting authority would lead to the development of more private-sector jobs and a shift away from the reliance on foreign energy sources.

Investing more heavily in utility-scale solar is also an effective way to hedge against rising electricity prices, which are growing at an unsustainable rate.

KMB: Solar Engineering Company

The new solar landscape is evolving quickly, and incentives to meet government solar development goals are now available for qualifying organizations. For the latest insights on all aspects of solar engineering and construction, contact the team at KMB.

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