A new report from the Department of Energy’s Lawrence Berkeley
National Laboratory (LBNL) finds that the future growth of distributed
generation solar PV is heavily influenced by retail electricity rate
design – and that proposed changes to net metering rules and retail rate
structures could harm increased adoption of distributed solar.
The report, titled Net Metering and Market Feedback Loops: Exploring the Impact of Retail Rate Design on Distributed PV Deployment,
is meant to inform the public and utility regulators that about the
effects of changes proposed by a growing number of states to their net
metering rules and retail rate structures – changes fueled by worry that
increased adoption of distributed PV could result in unwelcome
financial impacts on utilities and consumers.
Ryan Wiser, one of the report’s authors, said utilities are primarily concerned that solar customers don’t always pay their fair share
of fixed infrastructure costs. “Utilities sometimes claim that
net-metered solar customers are unfairly subsidized under existing net
metering rules, with non-solar customers paying a larger share of the
fixed costs of the electric grid,” Wiser said.
Changes to retail rate structures, which were proposed by 24 utilities across 13 states in the first quarter of 2015 alone,
would include instituting fixed monthly charges for residential power
customers – a move that could have a damaging effect on distributed
solar. “A $50 per-month fixed charge for residential customers could
reduce long-term PV deployment by 60 percent,” Wiser said.
Some states are also considering net-metering changes that would
compensate excess solar generation at a lower-than-retail rate. Wiser
said the report shows such changes would “undermine the economic
attractiveness for customers of both solar and energy efficiency
investments” and could result in further reduced solar deployment.
There are two specific market feedback scenarios discussed in the
report that could alternately help and hurt distributed solar adoption.
The first scenario states that if utilities increase retail electricity
prices too much in order to make up for under-recovery of fixed utility
costs, it could result in even more consumers seeking out alternatives,
thereby driving a surge in distributed generation solar. The second
scenario envisions increased solar deployment causing utilities to shift
peak price periods to later in the day, which would have a dampening
effect on PV adoption among customers paying on time-of-use structures.
Report results indicate that these two feedback effects may cancel
each other out at the national level, resulting in a modest net effect. Galen Barbose, co-author of the report, said it’s important for
decision makers to have a clear understanding of the complex impacts
that reforms to rate design and net metering could have not the least of
which include slowing down energy and environmental policy objectives,
as well as limiting the options for choice-hungry consumers.
“Understanding the deployment impacts of potential reforms
to rate design and net metering will be critical for regulators and
other decision makers as they consider changes to retail rates, given
the continued role of PV in advancing energy and environmental policy
objectives and customer choice,” Barbose said.
“Solar represents one of the primary solutions to global climate
change, whether deployed in distributed or utility-scale applications,”
Wiser added. “Continued solar deployment can help facilitate cost
reductions, enabling solar to be an even larger part of our long-term
energy mix.”
Released today, Net Metering and Market Feedback Loops: Exploring the Impact of Retail Rate Design on Distributed PV Deployment can be found here.
http://www.renewableenergyworld.com/articles/2015/07/note-to-puc-changes-to-electricity-rate-design-could-dramatically-impact-the-future-of-solar-pv.html