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Title: On the Path to SunShot. Utility Regulatory and Business Model Reforms for Addressing the Financial Impacts of Distributed Solar on Utilities

Abstract

Net-energy metering (NEM) has helped drive the rapid growth of distributed PV (DPV) but has raised concerns about electricity cost shifts, utility financial losses, and inefficient resource allocation. These concerns have motivated real and proposed reforms to utility regulatory and business models. This report explores the challenges and opportunities associated with such reforms in the context of the U.S. Department of Energy's SunShot Initiative. Most of the reforms to date address NEM concerns by reducing the benefits provided to DPV customers and thus constraining DPV deployment. Eliminating NEM nationwide, by compensating exports of PV electricity at wholesale rather than retail rates, could cut cumulative DPV deployment by 20% in 2050 compared with a continuation of current policies. This would slow the PV cost reductions that arise from larger scale and market certainty. It could also thwart achievement of the SunShot deployment goals even if the initiative's cost targets are achieved. This undesirable prospect is stimulating the development of alternative reform strategies that address concerns about distributed PV compensation without inordinately harming PV economics and growth. These alternatives fall into the categories of facilitating higher-value DPV deployment, broadening customer access to solar, and aligning utility profits and earnings with DPV. Specificmore » strategies include utility ownership and financing of DPV, community solar, distribution network operators, services-driven utilities, performance-based incentives, enhanced utility system planning, pricing structures that incentivize high-value DPV configurations, and decoupling and other ratemaking reforms that reduce regulatory lag. These approaches represent near- and long-term solutions for preserving the legacy of the SunShot Initiative.« less

Authors:
 [1];  [2];  [2];  [2];  [2];  [2];  [1];  [1];  [1];  [1]
  1. Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
  2. National Renewable Energy Lab. (NREL), Golden, CO (United States)
Publication Date:
Research Org.:
National Renewable Energy Lab. (NREL), Golden, CO (United States)
Sponsoring Org.:
USDOE Office of Energy Efficiency and Renewable Energy (EERE), Solar Energy Technologies Office (EE-4S)
OSTI Identifier:
1253987
Report Number(s):
NREL/TP-6A20-65670; LBNL-1004371
DOE Contract Number:  
AC36-08GO28308
Resource Type:
Technical Report
Country of Publication:
United States
Language:
English
Subject:
14 SOLAR ENERGY; 29 ENERGY PLANNING, POLICY, AND ECONOMY; SunShot; solar; PV; photovoltaic; DPV; distributed; regulation; regulatory; utility; utilities; business model; rate design; net metering; net-energy metering; NEM; reform; community solar; distribution network operators; services-driven utilities; performance-based incentives; system planning; decoupling

Citation Formats

Barbose, Galen, Miller, John, Sigrin, Ben, Reiter, Emerson, Cory, Karlynn, McLaren, Joyce, Seel, Joachim, Mills, Andrew, Darghouth, Naim, and Satchwell, Andrew. On the Path to SunShot. Utility Regulatory and Business Model Reforms for Addressing the Financial Impacts of Distributed Solar on Utilities. United States: N. p., 2016. Web. doi:10.2172/1253987.
Barbose, Galen, Miller, John, Sigrin, Ben, Reiter, Emerson, Cory, Karlynn, McLaren, Joyce, Seel, Joachim, Mills, Andrew, Darghouth, Naim, & Satchwell, Andrew. On the Path to SunShot. Utility Regulatory and Business Model Reforms for Addressing the Financial Impacts of Distributed Solar on Utilities. United States. doi:10.2172/1253987.
Barbose, Galen, Miller, John, Sigrin, Ben, Reiter, Emerson, Cory, Karlynn, McLaren, Joyce, Seel, Joachim, Mills, Andrew, Darghouth, Naim, and Satchwell, Andrew. Sun . "On the Path to SunShot. Utility Regulatory and Business Model Reforms for Addressing the Financial Impacts of Distributed Solar on Utilities". United States. doi:10.2172/1253987. https://www.osti.gov/servlets/purl/1253987.
@article{osti_1253987,
title = {On the Path to SunShot. Utility Regulatory and Business Model Reforms for Addressing the Financial Impacts of Distributed Solar on Utilities},
author = {Barbose, Galen and Miller, John and Sigrin, Ben and Reiter, Emerson and Cory, Karlynn and McLaren, Joyce and Seel, Joachim and Mills, Andrew and Darghouth, Naim and Satchwell, Andrew},
abstractNote = {Net-energy metering (NEM) has helped drive the rapid growth of distributed PV (DPV) but has raised concerns about electricity cost shifts, utility financial losses, and inefficient resource allocation. These concerns have motivated real and proposed reforms to utility regulatory and business models. This report explores the challenges and opportunities associated with such reforms in the context of the U.S. Department of Energy's SunShot Initiative. Most of the reforms to date address NEM concerns by reducing the benefits provided to DPV customers and thus constraining DPV deployment. Eliminating NEM nationwide, by compensating exports of PV electricity at wholesale rather than retail rates, could cut cumulative DPV deployment by 20% in 2050 compared with a continuation of current policies. This would slow the PV cost reductions that arise from larger scale and market certainty. It could also thwart achievement of the SunShot deployment goals even if the initiative's cost targets are achieved. This undesirable prospect is stimulating the development of alternative reform strategies that address concerns about distributed PV compensation without inordinately harming PV economics and growth. These alternatives fall into the categories of facilitating higher-value DPV deployment, broadening customer access to solar, and aligning utility profits and earnings with DPV. Specific strategies include utility ownership and financing of DPV, community solar, distribution network operators, services-driven utilities, performance-based incentives, enhanced utility system planning, pricing structures that incentivize high-value DPV configurations, and decoupling and other ratemaking reforms that reduce regulatory lag. These approaches represent near- and long-term solutions for preserving the legacy of the SunShot Initiative.},
doi = {10.2172/1253987},
journal = {},
number = ,
volume = ,
place = {United States},
year = {2016},
month = {5}
}

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