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Title: The impact of retail electricity tariff evolution on solar photovoltaic deployment

Abstract

Here, this analysis explores the impact that the evolution of retail electricity tariffs can have on the deployment of solar photovoltaics. It suggests that ignoring the evolution of tariffs resulted in up to a 36% higher prediction of the capacity of distributed PV in 2050, compared to scenarios that represented tariff evolution. Critically, the evolution of tariffs had a negligible impact on the total generation from PV $-$ both utility-scale and distributed $-$ in the scenarios that were examined.

Authors:
 [1];  [1];  [1];  [1]
  1. 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:
1409301
Report Number(s):
NREL/JA-6A20-68849
Journal ID: ISSN 1040-6190
Grant/Contract Number:
AC36-08GO28308
Resource Type:
Journal Article: Accepted Manuscript
Journal Name:
Electricity Journal
Additional Journal Information:
Journal Volume: 30; Journal Issue: 9; Journal ID: ISSN 1040-6190
Publisher:
Elsevier
Country of Publication:
United States
Language:
English
Subject:
14 SOLAR ENERGY; 29 ENERGY PLANNING, POLICY, AND ECONOMY; photovoltaics; solar; tariffs; rates; evolution; distributed; adoption; projection; dGen; ReEDS

Citation Formats

Gagnon, Pieter, Cole, Wesley J., Frew, Bethany, and Margolis, Robert. The impact of retail electricity tariff evolution on solar photovoltaic deployment. United States: N. p., 2017. Web. doi:10.1016/j.tej.2017.10.003.
Gagnon, Pieter, Cole, Wesley J., Frew, Bethany, & Margolis, Robert. The impact of retail electricity tariff evolution on solar photovoltaic deployment. United States. doi:10.1016/j.tej.2017.10.003.
Gagnon, Pieter, Cole, Wesley J., Frew, Bethany, and Margolis, Robert. 2017. "The impact of retail electricity tariff evolution on solar photovoltaic deployment". United States. doi:10.1016/j.tej.2017.10.003.
@article{osti_1409301,
title = {The impact of retail electricity tariff evolution on solar photovoltaic deployment},
author = {Gagnon, Pieter and Cole, Wesley J. and Frew, Bethany and Margolis, Robert},
abstractNote = {Here, this analysis explores the impact that the evolution of retail electricity tariffs can have on the deployment of solar photovoltaics. It suggests that ignoring the evolution of tariffs resulted in up to a 36% higher prediction of the capacity of distributed PV in 2050, compared to scenarios that represented tariff evolution. Critically, the evolution of tariffs had a negligible impact on the total generation from PV $-$ both utility-scale and distributed $-$ in the scenarios that were examined.},
doi = {10.1016/j.tej.2017.10.003},
journal = {Electricity Journal},
number = 9,
volume = 30,
place = {United States},
year = 2017,
month =
}

Journal Article:
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  • The price of electricity supplied from home rooftop photo voltaic (PV) solar cells has fallen below the retail price of grid electricity in some areas. A number of residential households have an economic incentive to install rooftop PV systems and reduce their purchases of electricity from the grid. A significant portion of the costs incurred by utility companies are fixed costs which must be recovered even as consumption falls. Electricity rates must increase in order for utility companies to recover fixed costs from shrinking sales bases. Increasing rates will, in turn, result in even more economic incentives for customers tomore » adopt rooftop PV. In this paper, we model this feedback between PV adoption and electricity rates and study its impact on future PV penetration and net-metering costs. We find that the most important parameter that determines whether this feedback has an effect is the fraction of customers who adopt PV in any year based solely on the money saved by doing so in that year, independent of the uncertainties of future years. These uncertainties include possible changes in rate structures such as the introduction of connection charges, the possibility of PV prices dropping significantly in the future, possible changes in tax incentives, and confidence in the reliability and maintainability of PV. (C) 2013 Elsevier Ltd. All rights reserved.« less
  • This article examines the impact of retail electricity rate design on the economic value of grid-connected photovoltaic (PV) systems, focusing on commercial customers in California. Using 15-min interval building load and PV production data from a sample of 24 actual commercial PV installations, we compare the value of the bill savings across 20 commercial-customer retail electricity rates currently offered in the state. Across all combinations of customers and rates, we find that the annual bill savings from PV, per kWh generated, ranges from $0.05 to $0.24/kWh. This sizable range in rate-reduction value reflects differences in rate structures, revenue requirements, themore » size of the PV system relative to building load, and customer load shape. The most significant rate design issue for the value of commercial PV is found to be the percentage of total utility bills recovered through demand charges, though a variety of other factors are also found to be of importance. The value of net metering is found to be substantial, but only when energy from commercial PV systems represents a sizable portion of annual customer load. Though the analysis presented here is specific to California, our general results demonstrate the fundamental importance of retail rate design for the customer-economics of grid-connected, customer-sited PV.« less
  • This article examines the impact of retail electricity rate design on the economic value of grid-connected photovoltaic (PV) systems, focusing on commercial customers in California. Using 15-minute interval building load and PV production data from a sample of 24 actual commercial PV installations, we compare the value of the bill savings across 20 commercial-customer retail electricity rates currently offered in the state. Across all combinations of customers and rates, we find that the annual bill savings from PV, per kWh generated, ranges from $0.05/kWh to $0.24/kWh. This sizable range in rate-reduction value reflects differences in rate structures, revenue requirements, themore » size of the PV system relative to building load, and customer load shape. The most significant rate design issue for the value of commercial PV is found to be the percentage of total utility bills recovered through demand charges, though a variety of other factors are also found to be of importance. The value of net metering is found to be substantial, but only when commercial PV systems represent a sizable portion of annual customer load. Though the analysis presented here is specific to California, our general results demonstrate the fundamental importance of retail rate design for the customer-economics of grid-connected, customer-sited PV.« less
  • In many climate change mitigation scenarios, integrated assessment models of the energy and climate systems rely heavily on renewable energy technologies with variable and uncertain generation, such as wind and solar PV, to achieve substantial decarbonization of the electricity sector. However, these models often include very little temporal resolution and thus have difficulty in representing the integration costs that arise from mismatches between electricity supply and demand. The global integrated assessment model, MESSAGE, has been updated to explicitly model the trade-offs between variable renewable energy (VRE) deployment and its impacts on the electricity system, including the implications for electricity curtailment,more » backup capacity, and system flexibility. These impacts have been parameterized using a reduced-form approach, which allows VRE integration impacts to be quantified on a regional basis. In addition, thermoelectric technologies were updated to include two modes of operation, baseload and flexible, to better account for the cost, efficiency, and availability penalties associated with flexible operation. In this paper, the modeling approach used in MESSAGE is explained and the implications for VRE deployment in mitigation scenarios are assessed. Three important stylized facts associated with integrating high VRE shares are successfully reproduced by our modeling approach: (1) the significant reduction in the utilization of non-VRE power plants; (2) the diminishing role for traditional baseload generators, such as nuclear and coal, and the transition to more flexible technologies; and (3) the importance of electricity storage and hydrogen electrolysis in facilitating the deployment of VRE.« less
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