4101 Mars Hill Frederiksted, VI 00840 | 4605 Tutu Park Mall #231 St. Thomas, VI 00802
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Distributed Generation Project

central-gen-vs-distributed-genNarrative Description: The purpose of the 2016 EIC funding is to implement some of the priority actions identified in the U.S. Virgin Islands Energy Road Map. This funding would support the medium- and long-term health of distributed generation markets in the USVI, with the potential to provide market-based solutions other than Net Metering (NEM) for the other territories and similar jurisdictions. While NEM provided an excellent opportunity to establish a solar market in the USVI, the size of the energy market and continued importance of the electricity grid require the design and implementation of market opportunities for DG other than NEM.

The United States Virgin Islands (USVI) is facing numerous energy-related economic and societal challenges. Since the USVI has some of the highest energy costs and the most promising solar resources in the United States, distributed solar PV has the potential to dramatically change the existing energy paradigm in the territory. Despite this promise, solar market development in the USVI faces a number of significant technical and societal challenges in the very near term. As a group of islands with limited electricity load, high penetrations of distributed generation have the potential to create significant technical and operational barriers for the Water and Power Authority (WAPA). Additionally, the economics of off-grid solar has the near-term potential to cause a significant number of USVI utility customers to disconnect from the WAPA system, raising concerns about the economic viability of both the current utility model and the societal impacts of grid defection.

Distributed Generation Market Structure Analysis & Comprehensive Energy Plan

This project will aid in the support of the medium to long term health of distributed generation markets in the USVI, with the potential to provide market-based solutions other than Net Metering (NEM) for the other territories and similar jurisdictions. While NEM provided an excellent opportunity to establish a solar market in the USVI, the size of the energy market and continued importance of the electricity grid requires the design and implementation of market opportunities for Distributed Generation (DG) other than Net Metering.

This project includes several parts to ensure that all the benefits of distributed generation to the USVI electricity market are identified and available to customers in the USVI. Similar to how EDIN established the basis for the establishment of a DG market in the USVI, the first component of this project is a grid integration study, which would examine the technical issues involved in low, medium, and high DG scenarios. Second, an economic analysis of the return on investment for DG in the USVI would provide the foundation for DG market policy that examines the economic viability of both the current utility model and the societal impacts of grid defection. Third, a training would be offered to USVI policymakers and the Energy Roundtable on the different approaches to DG that have emerged over the past two years. Fourth, the funding would provide technical support as the USVI works to draft necessary legislation, PSC rules, and agency operating procedures needed to support a Comprehensive Energy Policy. Taken together, the analysis and training supported by this funding would enable the USVI to craft a sustainable alternative to NEM, providing economic opportunity to those solar companies that capitalized on NEM and empower customer choice, without disadvantaging those who cannot own their own DG system. Total completion time for this project is 18 months.

Statement of Need: Presently, the USVI distributed generation arena is at a standstill.  In 2009, Act 7075 was the landmark legislation molding the renewable and alternative energy landscape for the Virgin Islands.  Since then there have been two amendments to Act 7075. Act 7628 and Act 7705 both attempted to correct or make additions to enhance or promote renewable energy development or the renewable energy industry.  Another addition to the policy landscape is Act 7586 the Feed-In Tariff Act that will need to be addressed by the PSC in the near future. There have also been discussions about the need for Stand-By Tariff legislation to address stand-alone systems that currently remain tied to the grid putting the utility at a disadvantage to meet an increased peak demand. During the years from 2010 to 2015, there was much growth and development in renewable energy in the VI. The amount of on-site net metered renewables that can be developed in the USVI is limited to 10 MW on the St. Thomas/St. John grid and 5 MW on the St. Croix grid. The rapid growth of solar photovoltaic (PV) systems means that the cap is now close to being met placing the future of renewables and distributed generation in limbo. There is a lack of clarity as to what happens next as the market approaches the cap and what happens once the cap is reached. The cap creates the need to develop clear and transparent policies for distributed generation. This project will enable us to open up the market for distributed generation and create an energy policy that will allow the USVI to meet the potentials identified in the U.S. Virgin Islands Energy Roadmap.

Detailed Project Timeline(s):

Phase 1: Grid Integration Analysis – 6 months

Phase 2: Economic analysis of DG ROI – 6 months

Phase 3: State-of- the-DG Market Training – 2 months

Phase 4: Policy development – 12 months

Final Completion – 18 months