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The Potential Market for Photovoltaics and Other Distributed Resources in Rural Electric Cooperatives

Abstract:
In the United States, rural electric cooperatives have an aging distribution system (1 million miles of distribution wires were originally installed over 40 years ago) and a load density that is about one-tenth of the load density at other utilities. The result is that there may soon be a large market opportunity for photovoltaics (PV) and other distributed resources. This paper calculates the cost of replacing portions of the distribution system as it wears out with hybridPV systems, compares it to the cost of replacing the system with equivalent distribution system equipment, and selects the alternative with the lowest cost. Results suggest that there is a potential market of 500 MW to 950 MW of PV at a price of $3,000/kW (a 50 percent reduction over PV prices in 2000) and a corresponding fossil-based generation market size of 280 MW to 555 MW at a price of $1,000/kW The hybrid-PV systems could replace 7 percent to 16 percent of the miles of distribution system and could save co-ops $1.0 billion to $2.5 billion (present value).

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Energy Specializations: Electricity – Generation Technologies; Electricity – Distributed Generation; Renewables – Solar

JEL Codes:
Q2 -
L94 - Electric Utilities
Q51 - Valuation of Environmental Effects

Keywords: Photovoltaics, Renewable energy, electricity cooperatives, Distributed generation

DOI: 10.5547/ISSN0195-6574-EJ-Vol21-No3-5


Published in Volume21, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.