SEA’s Revenue Stack AdvantageSM Approach for Analyzing and Forecasting Distributed Solar Variable Revenue Streams
Publish Date: February 25, 2025
Written by: Tom Michelman, Vice President & Senior Director,
Distributed Energy Resources Practice Lead
Estimated Reading Time: 3 Minutes
We describe our distributed solar (e.g., community solar, virtual net metering) revenue analysis value proposition as follows:
- We deliver financeable market-specific forecasts of distributed solar variable revenue streams to steer confident investments
- for DER project development and finance decision-makers accountable for justifying investments and strategic decisions
- by decoding opaque revenue realization and associated volatility driven by asynchronous:
- dynamic wholesale electric markets,unique state policies, and
- convoluted utility retail rates
- with our Revenue Stack Advantage approach, coupling independent forecasts rooted in granular revenue stack analysis delivered with background-rich supporting documentation.
One might ask, what does that last bullet point mean in practice? What is SEA’s “Revenue Stack Advantage” approach?
It means our approach to analyzing and forecasting distributed solar variable revenue streams accounts for the details of the volatile revenue stream components (e.g., generation, transmission, distribution, RECs, etc.) and their important sub-components (e.g., for the generation component: energy, capacity, ancillary services, reconciliation charges, etc.).
It means that each market’s revenue stream is accounted for independently, with understanding that drivers (e.g., rate class peak load contribution, electrification) affecting the size and volatility of one revenue stream (e.g., generation) may also affect another (e.g., transmission).
It means analyzing and forecasting at the monthly level to best understand revenue stream component drivers and trends but providing results in both a monthly and annual format to best suit our client’s needs.
It means, as most DG solar market revenue streams are derivatives of retail rates, understanding the often indirect / delayed connection and impact of wholesale market trends on retail rates, and unraveling the magnitude and timing of the impact on retail rates and thus on DG solar market revenue streams.
It means taking the time to detect, decipher, detail into our forecasts the idiosyncrasies that impact revenue streams for each individual utility market by customer class / rate class (and sometimes location, period and off taker).
It means digging into the revenue stream history and interpreting whether and how recent component values of the revenue stack are indication of trends or just ephemeral blips that if not understood could bias long-term forecasts.
It means we are in the weeds, digging into details that others don’t know about, don’t understand, or don’t think are worthwhile (you don’t know if you don’t look) because of expertise, time or resources.
It means delivering content rich slide decks accompanying our monthly forecasts documenting and justifying our base, low and high case-based revenue forecasts, and providing you, your team and your partners access to our team of DER analysts to discuss any questions they have.
It means doing so independently (let the chips fall where they may) and leaving it up to you and your team to make the business decisions based on our unbiased analysis.
It means being humble enough to acknowledge that there is always another layer of the analysis onion to peel back, and dynamics to decipher; open-minded enough to take and deploy feedback; and focused enough to strive for continuous improvement of our analysis and forecast approach.
We incorporate SEA’s Revenue Stack Advantage approach into all our bespoke and off-the-shelf distributed solar revenue analysis. You can learn more about our offerings or find contact information to speak to one of the experts at our DER Revenue Analysis webpage.
