photovoltaics and electric utilities: an evaluation of utility attitudes and expectations

Solar Cells, 29 (1990) 25 - 37 25

PHOTOVOLTAICS AND ELECTRIC UTILITIES: AN EVALUATION OF UTILITY ATTITUDES AND EXPECTATIONS

DANIEL RICH, BILL N. BARON, CRAIG McDONNELL and CONSTANTINE HAJILAMBRINOS

Center for Energy and Urban Policy Research, and Institute o f Energy Conversion, University o f Delaware, Newark, DE 19716 (U.S.A.)

(Received 24 November, 1989;accepted 21 December, 1989)

Summary

The U.S. Department of Energy has argued that the long-term market potential for photovoltaics (PVs) lies in central-station utility applications. Based on results of a nationwide survey of U.S. electric utilities, this s tudy evaluates utility experience and information about PVs, utility perceptions of the viability of both central-station and dispersed applications, and utility expectat ions about the future prospects for PVs in the power systems market. While a number of utilities are actively involved with PV demonstra- tion projects and remote applications, the att i tudes and investment plans of most utilities are not supportive of central-station PV applications. More- over, while some utilities anticipate growth in dispersed applications in their markets, most utilities are unprepared to deal with the challenges or business opportunit ies created by the introduction of dispersed systems. In general, limited knowledge and uncertainty characterize the general state of utility thinking about PVs as a power source.

Introduct ion

Since the mid-1970s, the prevailing wisdom in the U.S. has been that the long-term market potential for photovoltaics (PVs) lies in the utility sector. The U.S. Department of Energy (DOE), PV industry analysts and the Electric Power Research Institute (EPRI), a utility funded research organiza- tion, have all expected that PVs will make their contr ibut ion primarily through central-station utility applications. EPRI has claimed, for example, that the ult imate development of PV markets will lead to systems that "provide supplementary power to centralized electrical grids", and that "can economically compete, on a widescale basis, in central-station, utility appli-

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cations" [1]. Similarly, DOE's Five Year Research Plan for the national photovoltaics program announces the "ult imate expectat ion" that:

"in the early 1990s, utility-sized photovoltaic systems for some utilities will be economically justified and will be built in different parts of the nation. Beyond the early 1990s, continued research and development should make photovoltaics economically justified for many more utilities in the United States [2]" .

This expectation corresponds closely with the pattern of federal investment in PV R & D since the mid-1970s. Federal R & D has concentrated on programs intended to meet the efficiency, reliability and cost targets deemed appropriate for central-station utility applications. This emphasis continues to characterize current federal programs. In fiscal year (FY) 1988, for example, Congress directed DOE to fund the Photovoltaics for Utility Scale Applications Project ( P V U S A - sponsored by Pacific Gas and Electric with participation by EPRI, San Diego Gas and Electric, Virginia Power and other utilities). The purpose of PVUSA is to evaluate PV technologies and systems in utility-scale applications and to encourage their introduction in the utility power market.

The expectation that PV power will be commercialized primarily through central-station utility applications has been formulated and sus- tained with little systematic knowledge about utility atti tudes and expectations concerning the prospects for PVs as a generating source. Most EPRI analysis has concentrated on technical factors and PV manufacturing costs. No comprehensive analysis of collective utility experience with PV systems has been conducted since 1983 [3], and no general assessment of utility attitudes about PVs has previously been available. Moreover, there has been no analysis of utility attitudes and expectations in relation to dispersed residential and commercial PV systems, or of the strategies of utilities for dealing with the introduction of dispersed systems in their market areas.

This study reports the results of a nationwide survey of electric utilities concerning their experience with PV applications, their perceptions of the viability of such applications and their expectations about the future prospects for utility applications of PVs. The analysis evaluates the extent to which utilities' knowledge, attitudes and investment strategies are supportive of PV commercialization in both central-station and dispersed applications. It also identifies factors that influence utility investments in PV development and that impact upon the receptivity of utilities to a greater reliance on PV as an electricity source. The analysis examines utility views about federal PV R & D and commercialization policies, and about the influence of the current regulatory environment on PV applications. Finally, the investigation considers the expectations of utilities about the future of PV applications in the power systems market and the relationship of these expectations to utility judgements of the cost and performance requirements for broad-based PV applications.

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Research procedures

During the Fall of 1988, a national survey of electric utilities was conducted using an instrument developed by the University of Delaware's Center for Energy and Urban Policy Research and Institute of Energy Con- version. The 90 item survey instrument was designed to measure utility attitudes toward photovoltaics and related issues. Utilities were asked about eight factors.

(1) The challenges utilities currently face. (2) The sources of utili ty information about PVs and the extent of their experience with PV applications. (3) Their evaluations of the viability of PVs as a utility generating source. (4) Their perceptions of the status and development of dispersed commercial and residential PVs applications in their market areas and the ways in which they plan to relate to these systems. (5) Their assessment of the state of the PV industry. (6) Their atti tudes towards federal PV R & D and commercialization policies. (7) Their att i tudes about the impacts of regulatory policies on PV development. (8) Their views of future prospects for PV costs and performance, and for utili ty PV applications. A total of 185 utilities were selected from lists of generating utilities

obtained from DOE and EPRI. The survey was mailed in October, 1988, with a follow-up in December, 1988. Responses were received from 98 utilities. Because the data provided was incomplete, 17 responses were dis- carded; the remaining 81 were included in the analysis.

Most respondents represent large, investor-owned utilities. Of the 81 responding utilities, 60 have generating capacity exceeding 1000 MW. Only six utilities have less than 1000 MW capacity, although 15 utilities did not respond to this survey item. Of the utilities responding to the survey, 66 are investor owned, while 15 are government owned. No statistically significant relationships exist between utility size or ownership status and responses to survey questions. Responding utilities come from 40 states, the District of Columbia and Puerto Rico. States with the largest number of responding utilities are Texas (7), Pennsylvania (6), and California, New York, Ohio and Wisconsin (4).

Current uti l i ty challenges

As indicated by the responses summarized in Table 1, utilities report that they face similar challenges. Almost all of the respondents believe that meeting peak demand is an important or very important factor for their companies, and no respondent reports that it is unimportant . Similarly, approxim-

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TABLE 1

Current utility challenges

Very i m p o t e n t % N

Important N o t Don ' t No important k n o w answer

% N % N % N % N

Meeting peak load demand 80.0 65 Maintaining base load 55.6 45 capacity Obtaining capital at 54.3 44 reasonable costs Reducing environmental 35.8 29 emissions Adding new capacity in small 21.0 17 increments (modularity) Integrating independent 1 l . l 9 producers into the grid

16.1 13 0.0 0 2.5 2 1.2 1 32.1 26 8.6 7 1.2 1 2.5 2

35.8 29 1.2 l 7.5 6 1.2 1

49.3 40 7.5 6 6.2 5 1.2 l

57.0 46 13.5 11 6.1 5 2.5 2

45.7 37 27.2 22 14.8 12 1.2 l

a te ly 90% of the r e sponden t s perceive tha t maintaining base load capaci ty r equ i remen t s and obtaining capital at a reasonable cost are im p o r t an t or very impor t an t to thei r companies . The survey indicates tha t there is also a general conce rn among util i t ies abou t env i ronmenta l issues. Over 85% rep o r t tha t reducing env i ronmenta l emissions is impor t an t to their companies , while less than 8% repor t tha t it is not .

Over 75% of the r e sponden t s indicate tha t adding capaci ty in small increments is impor t an t or very impor t an t to their companies , while on ly 13% indicate tha t it is no t impor t an t . There is significant regional variat ion on this i tem, however , wi th r e sponden t s in the Mid-West region rat ing this fac tor lower than utili t ies in o the r regions. There is also significant regional variat ion in the impor t ance util i t ies a t tach to the in tegra t ion of i n d ep en d en t power p roducer s into the grid. Over 50% of the r e sponden t s r ep o r t tha t such in tegrat ion is i m p o r t a n t to thei r companies , while on ly ab o u t 25% r e p o r t tha t is is no t impor t an t . Utilities in the Sou thwes t and Nor theas t , however , give this i t em greater p r ior i ty than uti l i t ies in the Mid-West and South .

In principle, the character is t ics o f PVs as a power source are well m a t c he d to meet ing m a n y o f the challenges cur ren t ly facing utilit ies. F o r ma ny par ts o f the coun t ry , PV sys tem o u t p u t is congruen t with peak load demands . In addi t ion , PV power systems are capable o f reducing environ- menta l emissions. PV systems may also be added in small inc rements and t hey o f fe r lower capital inves tment r equ i remen t s than large-scale conven- t ional power stat ions. Given the challenges facing utilities, inves tment in PVs would appear to be an a t t rac t ive op t ion .

Ut i l i ty PV in fo rma t ion and exper ience

Utilities receive i n fo rma t ion concern ing PVs f r o m a wide var ie ty o f sources. As the da ta in Table 2 indicate , however , vir tual ly all r e sponden t s

TABLE 2

Utility sources of PV information

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So urce N Percen rage o f utilities

EPRI studies 76 93.8 PV manufacturers 52 64.2 Other utilities evaluations 50 61.7 Department of energy 43 53.l Own studies 35 43.2 Outside consultants 23 28.4 Other (trade magazines,

technical journals) 24 29.6

report that their utilities receive PV information f rom EPRI. Many also receive information f rom PV manufacturers, the U.S. DOE, and from other utilities' evaluations of PV. In addition, a sizable number acquire information from their own studies. Less than 33% of the respondents, however, indicate that their companies rely on PV trade magazines, or on technical research publications from the journals of such organizations as the Insti tute of Electrical and Electronics Engineers. Of the utilities surveyed, 28% utilize consultant reports as a basis of PV information.

Utility experience with PVs is limited but growing. A sizable number of utilities are already involved with PV applications. Nationwide, 33 of the responding utilities are using or planning to use PV systems. Most current applications are limited to PV demonstra t ion projects (such as PVUSA) or to the use of PVs in remote power systems. However, by 1988, there were over 8 MW of installed capacity in grid-connected centralized PV power plants [4].

PV viability as a uti l i ty generating source

Utility perceptions of PV viability as a generating source are mixed. As indicated by the data in Table 3, almost 66% of all respondents believe that PVs are a viable generating alternative for some utilities, but less than 9% believe it is attractive for their own utility. Moreover, 66% of respondents believe that regional variations in sunlight and land costs make PVs a viable opt ion for only a few parts of the country .

In general, most utilities do not consider PVs an attractive opt ion at this time. Of the respondents , 90% repor t that their companies are not now considering investing in PVs for central-station applications. Despite participation in demonstra t ion projects, most utilities do not consider PVs a viable opt ion for meeting most utility needs at this time. As indicated by the data in Table 4, between 50% and 75% of the respondents indicate that PVs are not attractive for meeting peak or base load demand, for load leveling or for

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TABLE 3

Uti l i ty percept ions o f PV viability

Agree

%

Disagree No No opinion answer

N % N % N % N

PV is a viable generating op t ion 64.2 for some utilities

PV is a viable generating op t ion 8.6 for my uti l i ty

Regional variations in sunlight 67.9 and land costs make PV a viable op t ion for only a few parts o f the coun t ry

PV is a viable op t ion for selective 81.5 ut i l i ty applicat ions in r emote areas

My company is considering investing 2.5 in central s tat ion applicat ions o f PV

My company is considering investing 8.6 in res ident ia l /commercia l applicat ions o f PV

My company is opt imis t ic about the 27.2 future prospects for PV in our area

52 17.3 14 18.5 15 0 0

7 84.0 68 7.4 6 0 0

55 17.3 12 12.3 10 2.5 2

66 5.0 4 12.3 10 1.2 1

2 88.9 72 8.6 7 0 0

7 77.8 63 13.6 11 0 0

22 40.7 33 30.9 25 1.2 1

TABLE 4

Potent ia l ut i l i ty applicat ions of PV

Attract ive Unattractive Don ' t k n o w No answer

% N % N % N % N

Base load 6.2 5 76.5 62 14.8 12 2.5 2 Peak load 23.0 19 61.7 50 13.5 11 1.2 1 Load leveling 14.8 12 61.7 50 21.0 17 2.5 2 Interruptable 6.2 5 56.8 46 34.5 28 2.5 2

service R e m o t e power 37.0 30 33.3 27 26.0 21 3.7 3

u se in p r o g r a m s t o s u p p o r t i n t e r r u p t i b l e s e r v i c e s . P V s a re n o w s e e n as m o s t

v i a b l e f o r r e m o t e a p p l i c a t i o n s , w i t h o v e r 80?0 o f r e s p o n d e n t s v i e w i n g t h i s

as a v i a b l e o p t i o n f o r s o m e u t i l i t i e s . O n l y 3 3 % o f r e s p o n d e n t s , h o w e v e r ,

r e g a r d t h i s u s e as a t t r a c t i v e f o r t h e i r o w n u t i l i t y .

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Dispersed PV Systems

While DOE and EPRI have argued that the long-term market potential for PV systems lies predominantly in central-station utility applications, some analysts expect dispersed residential and commercial PV applications, both grid-connected and stand-alone systems, to gain widespread introduction into utility market areas in the 1990s [5]. The introduction of such systems poses new challenges and, potentially, new business opportunit ies for utilities. Moreover, the pace and pattern of introduction of dispersed systems will clearly be influenced by whether utilities see it in their interests to facilitate or resist such applications.

Of reporting utilities, only 21 report privately owned, grid-connected PV systems in their market areas; the highest concentrations are in the Northeast and Southwest . Of the respondents, 33% also report non-grid PV systems in their service areas; there is an even regional distribution of such systems.

Utilities are unsure about the pattern of growth of both grid-connected and stand-alone dispersed systems. While some expect growth in the number of systems over the next 10 years, many expect no growth at all. In the case of commercial and residential grid-connected systems, 20% anticipate some growth in their market areas in the next 10 years, but less than 5% expect substantial growth and 42% expect no increase in the number of these systems in their market areas in the coming decade.

In the case of stand-alone, non-grid systems the responses are quite s i m i l a r - 30% expect some growth in the number of non-grid residential systems and 26% expect some growth in the number of non-grid commercial PV systems. However, 33% expect no growth at all in the numbers of either commercial and residential stand-alone systems. What is of particular interest and significance is that 33% of respondents do not know what to expect in the next 10 years in terms of grid-connected and stand-alone PV systems in their market areas.

Most utilities do not expect substantial involvement with dispersed PV systems in the next 10 years. The vast majori ty of utilities (nearly 80%) are not considering investments in residential or commercial PV applications (see Table 3). Moreover, only 33% of utilities expect to play an active role in relation to dispersed systems and 80% expect to deal with dispersed systems on a case-by-case basis. Approximately 66% of respondents believe it is unlikely or very unlikely that their utilities will offer service contracts to independent power producers, own or sell power conditioning equipment used by independent power producers, or finance residential or commercial PV systems. Of the respondents, 60% believe that it is unlikely that their company will own residential or commercial PV systems. In response to all questions concerning utility relationships to dispersed systems, however, 25%-33% of the respondents are "neutral", indicating that they are unsure about what strategies their companies may adopt over the coming decade.

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The PV Industry

The structure, capacity and performance of the PV manufacturing industry are key factors influencing the diffusion of PVs generally and utility applications of PVs specifically. Obviously, the pace of PV applications in the power systems market is significantly related to the suitability of the products made available by the PV industry. As an EPRI report has pointed out "a photovoltaic technology with all of the desirable performance characteristics will be of little benefit to utilities unless there develops an industry capable of providing the level of manufacturing, distribution and service that utilities require" [6]. At the same time, the pace and character of utility investment in PV technology will have a direct impact on the features of the PV i n d u s t r y - the stability and pace of its growth, its capacity to meet demand in the power systems market and its ability to direct investment to the development of products suitable for utility applications.

Only 14% of survey respondents feel the PV industry now has a product suitable for central-station applications. More than half (56%) of the respondents believe that such a product is not now available and 30% have no opinion. A larger percentage (43%) feel the PV industry has a product suitable for residential, commercial and industrial applications. Nevertheless, about 33% of respondents believe such a product is not now available and 25% of respondents express no opinion on the availability of such a product .

Relatively few utilities believe that the PV industry has the capacity to meet utility needs in the coming decade. Only 26% of respondents feel that the PV industry can provide utilities with adequate supplies, while 37% believe it cannot and 35% express no opinion about industry capacity. There exists, however, a significant relationship between responses to this question and whether a utility receives information from the PV industry. Respon- dents from utilities that do not receive information from the PV industry are more likely to believe that the industry is incapable of providing adequate supplies than respondents from utilities that do receive industry information.

Many utilities are also concerned with the capacity of the PV industry to assure the reliability of its products. For example, 42% of respondents feel that the availability of product warranties from PV manufacturers is an important or very important factor in their decisions to invest in PVs, and only 7% rated this factor as unimportant .

Federal PV R & D and commercialization policies

Federal government support was a key impetus to the growth of the PV industry through the 1970s. During this period, the government spent nearly $0.5 billion on PV research, development and demonstrat ion with annual funding growing to $160 million by 1980 and with fedral R & D expenditures exceeding private R & D expenditures by more than two to one in that same year [7, 8]. In the 1980s, however, the federal PV budget

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was reduced dramatically and DOE procurement of PV modules, which accounted for 25% of world production in 1980, dropped to 3% of world product ion by 1983 [9]. In FY 1989, the federal government spent only $35 million on PV R & D and the same amount was appropriated for FY 1990.

As indicated by the data in Table 5, over 66% of respondents feel that federal investment can increase the pace of utility applications of photovoltaics. However, only 25% of the respondents believe that federal programs are based on realistic expectat ions about PV technology development, and 50% have no opinion at all about the realism of federal expectations. Sim- ilarly, less than 13% believe that the expectat ions about market development attached to federal R & D and commercialization efforts are realistic, com- pared with 27% who believe that they are not realistic and, significantly, almost 60% who offer no opinion about the realism of the federal government 's market expectations. In spite of a high degree of concern about environmental emissions (Table 1), only about 10% of respondents felt that federal environmental policies encourage PVs in their service areas.

T A B L E 5

Ut i l i ty pe r cep t i ons o f g o v e r n m e n t and regu la to ry pol icies

Agree Disagree N o op in ion No answer

% N % N % N % N

Fede ra l i n v e s t m e n t in R& D and 70 .4 57 7.4 6 21.0 17 1.2 1 c o m m e r c i a l i z a t i o n p rograms can increase t he pace o f u t i l i ty app l i ca t ions o f PV

Fede ra l R&D and c o m m e r c i a l i z a t i o n 23.5 19 22.2 18 53.1 43 1.2 l p rog rams are based o n real is t ic e x p e c t a t i o n s o f PV t e c h n o l o g y d e v e l o p m e n t

Fede ra l R&D and c o m m e r c i a l i z a t i o n 12.3 10 27.2 22 59.3 48 1.2 1 p rograms are based o n real ist ic e x p e c t a t i o n s a b o u t PV m a r k e t d e v e l o p m e n t

Fede ra l e n v i r o n m e n t a l pol ic ies 11.1 9 37.0 30 50.7 41 1.2 1 encourage app l i ca t ions of PVs in m y service area

S ta te r egu la to ry pol icies 21.0 17 39.5 32 38.3 31 1.2 1 encourage my c o m p a n y to cons ide r PV app l i ca t ions

S ta te r egu la to ry pol icies 9.9 8 46.9 38 42 .0 34 1.2 l encou rage res iden t ia l PV app l i ca t ions in m y c o m p a n y ' s service area

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PVs and regulatory policies

For more than a decade, the regulatory framework in most states has been in a process of transition reflecting the changing, sometimes volatile, economics and politics of electricity generation and distribution, and the great level of uncer ta inty characteristic of uti l i ty planning. Within this already complex regulatory environment , the introduct ion of PV systems -- whether through central-station or dispersed appl ica t ions- -poses new regulatory challenges. PV regulatory issues range from questions of rate design and equipment standards to broader questions of the relationship of utilities to dispersed systems in terms of ownership, financing and back-up services. A majori ty of respondents {54%) believe that state regulatory policies are an important or very impor tant factor in determining whether their companies invest in PVs. Only 22% feel these policies are not important , and 21% express no opinion.

As indicated by the data in Table 5, nearly 40% of respondents believe that state regulatory policies now discourage their companies f rom considering PVs, and nearly half believe that such policies discourage residential and commercial PV applications. In both cases, however, about 40% of utilities have no opinion about the impact of current regulatory policies on utility PV applications or on dispersed residential and commercial PV applications.

Many utilities believe that there is a need for regulatory policies to deal with privately-owned PV systems. As indicated by the data in Table 6, nearly 90% of utilities favor standards for power conditioning and inversion equipment, and nearly 60% advocate design, module and installation requirements for PV systems. Beyond this, the pattern is less clear. A substantial percent-

TABLE 6

Utilities attitudes towards regulatory policies for private PV systems

Attract ive N o t No No At tract ive opinion answer

% N % N % N % N

Standards for power inversion and 88.9 conditioning equipment

Design, module and installation 59.3 requirements for residential and commercial systems

A special rate for utility back-up 43.2 of residential and commercial systems

Policies that encourage 48.l experimental PV research systems

Standardized contracts between 43.2 utilities and private producers

72 0 0 11.1 9 0 0

48 4.9 4 35.8 29 0 0

35 14.8 12 40.7 33 1.2 1

39 6.2 5 45.7 37 0 0

35 18.5 15 38.3 31 0 0

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age favor special rates for utility back-up services (43%), policies that encourage experimental PV research (48%), and standardized contracts between utilities and private producers (43%). Opposit ion to these policies is weak, ranging from 5% to 20% of respondents. A large percentage of utilities, however, have not formed positions on these regulatory matters. With the exception of standards for power inversion and conditioning equipment, between 35% and 48% of respondents express no opinion on these regulatory policies.

There are no statistically significant regional variations in utility responses to issues of regulatory policy with the exception of design, module and installation requirements. The variation on this item is the result of the influence of a large number of utilities in the Mid-Atlantic region who express no opinion about the desirability of such design, module and installation requirements. While only accounting for 15% of respondents, utilities in the Mid-Atlantic region recorded 33% of the "no opinion" responses on this item.

Prospects for PV costs, performance and applications

DOE has assumed that system cost, performance and reliability are key factors shaping the future of PVs. DOE forecasts that penetration of utility markets will begin when 30-year levelized electricity costs from PV systems are in the range of $0.10 per kilowatt hour and that PV systems will become a competit ive generating option when costs reach $0.06 per kilowatt hour [2]. Under this scenario, flat plate module efficiency of 15-20% and module costs of $45 -80 per square meter will be required along with balance of systems costs of $50 -100 per square meter, power conditioning costs of $150 per peak kilowatt , and system life expectancy of 30 years. All of these figures assume central-station applications in the year 2000.

Our analysis indicates that utilities agree that the cost, performance, and reliability of PV systems are important factors influencing utility applications of PVs. Almost 90% of respondents believe that for PVs to succeed as an important generating option, they must be cost-competitive with con- ventional utility generating technologies. Most utilities (94%) consider the cost per kilowatt of electricity produced by PV systems as the key factor in viability, and over 66% believe that for PV to be competit ive as a utility generating option it must produce electricity for between $0.05 and 0.10 per kilowatt hour.

The analysis also suggests, however, that utility knowledge about the factors that contr ibute to PV electricity costs is limited. Nearly 50% of the respondents believe that total system costs must fall below $1.00 per peak wat t for PVs to be a viable alternative, but almost 33% do not know what system cost will be required. Similarly, while most utilities consider module conversion efficiency important to investment decisions, almost 50% do not know what module efficiency level must be achieved to make PVs a viable

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alternative. Of those who indicate that they do know, 17% believe efficiencies of 11%-15% must be achieved and 26% believe module efficiencies of 16%-20% must be achieved before PVs can become a viable source of energy for utilities.

In terms of future prospects for utility-related PV applications, the respondents' views are mixed: 27% are optimistic, 41% are pessimistic and 32% express no opinion (see Table 3).

Conclusions and policy implications

Utility decisions can greatly influence the pace and character of PV commercialization. DOE and EPRI expect that the utility power market holds the key to the effectiveness of PV commercialization. There is also general agreement that utility decisions can greatly influence dispersed residential and commercial PV applications by developing an active and supportive interface. Moreover, utility decisions can significantly affect the availability of capital and reliable purchase agreements that are needed for PV cost reduction and industry growth.

While a number of utilities are actively involved with PV demonstra- tion projects and remote power applications, the attitudes and investment plans of most utilities are not supportive of broad PV applications in the power systems market. Few utilities perceive PVs as a viable option for meeting peak or base load demand or for load leveling, and few are considering investments in PV applications. Most utilities believe that PVs are not viable for their own operations or markets, and less than 33% of the utilities surveyed are optimistic about the future of utility applications of PVs.

Most utilities are unprepared to deal with the challenges or business opportunities created by widespread introduction of dispersed PV systems in their market areas. While some utilities anticipate growth in dispersed applications in their markets, most utilities have not developed a strategy to relate to such applications in a systematic manner. Instead, utilities expect to deal with dispersed systems on a case-by-case, incremental basis. In relationship to dispersed systems, there remains a significant level of uncertainty among utilities about what strategies may be appropriate.

Limited knowledge and uncertainty characterize the general state of utility thinking in regard to PV investment decisions. While recognizing a number of cost, technical, institutional and policy factors as important to investment decisions, utility knowledge of these factors is limited. On key issues relating to PV investment, many utilities have formed no opinion nor developed any systematic business plan or strategy. These results suggest that the salience of PV -- as both a utility challenge and a business opportun- ity -- has not yet been established. This condition, in itself, will constrain the pace of PV commercialization.

The results of this analysis call into question the general effectiveness of federal R & D and commercialization strategies which have concentrated on

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stimulating the use of PV in the power systems market. Most utilities are not convinced of the viability of PVs as a utility power source now or in the near future, and they are not prepared to make the investments in the near-term that may be necessary to sustain the development of the PV industry and to encourage the development of PV technologies suitable for broad-based utility applications in the future. At the same time, the concentration on central-station applications, by both the federal government and EPRI, has reinforced a neglect of both the challenges and opportunit ies that will face utilities in relating to dispersed PV applications. This neglect may also slow the pace of PV commercialization.

Acknowledgments

The research on which this s tudy is based was funded in part by the Electric Power Partners Program at the University of Delaware. The authors also wish to acknowledge the assistance of the following individuals in the development of this s tudy: Rober t D'Aiello, Solarex Corporation, Thin Film Division; Allen M. Barnett, Astro Power; Charles Driggs, Delmarva Power & Light Company; Donald Fagnan, Philadelphia Electric Company; and Zoltan Kiss, Chronar Corporation. The support and encouragement of our colleagues John Byrne and T. W. Fraser Russell is greatly appreciated.

References

1 Electric Power Research Institute, AP-3351: Photovoltaic Power Systems Research Evaluation: A Report o f the EPRI Ad Hoc Photovoltaic Advisory Committee, Pre- pared by Strategies Unlimited, EPRI, Palo Alto, CA, 1983, p. C-5.

2 U.S. Department of Energy, National Photovoltaics Program: Five Year Research Plan, 1987-1991, U.S. DOE, Washington DC, 1987, p. 26.

3 EPRI, AP-3665SR: Electric Utility Solar Energy Activities: 1983 Survey, EPRI, Palo Alto, CA, 1984.

4 J. Schafer, EPRIJ., March (1988)40 . 5 D. Fagnan, Philadelphia Electric Company, personal communication, 1988. 6 Electric Power Research Institute, AP-3351: Photovoltaic Power Systems Research

Evaluation: A Report o f the EPRI Ad Hoc Photovoltaic Advisory Committee, Pre- pared by Strategies Unlimited, EPRI, Palo Alto, CA, 1983, p. C-5.

7 E. Frankel, Technology, politics and ideology: the vicissitudes of federal solar energy policy, 1974-1983. in J. Byrne and D. Rich (eds.), The Politics o f Energy Research and Development, Transaction Books, New Brunswick, NJ, 1986.

8 J. D. Roessner, Sol. Cells, 5 (1982) 101. 9 P. D. Maycock and E. N. Stirewalt, A Guide to the Photovoltaic Revolution, Rodale

Press, Emmaus, PA, 1985.

photovoltaics and electric utilities: an evaluation of utility attitudes and expectations

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