Electricity Bill Savings from Residential Photovoltaic Systems: Sensitivities to Changes in Future Electricity Market Conditions

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Customer-sited photovoltaic (PV) systems in the United States are often compensated at the customer’s underlying retail electricity rate through net metering. Calculations of the customer economics of PV, meanwhile, often assume that retail rate structures and PV compensation mechanisms will not change and that retail electricity prices will increase (or remain constant) over time, thereby also increasing (or keeping constant) the value of bill savings from PV. Given the multitude of potential changes to retail rates and PV compensation mechanisms in the future, however, understanding how such changes might impact the value of bill savings from PV is critical for policymakers, regulators, utilities, the solar industry, and potential PV owners, i.e., any stakeholder interested in understanding uncertainties in and potential changes to the long-term customer economics of PV.

This scoping study investigates the impact of, and interactions among, three key sources of uncertainty in the future value of bill savings from customer-sited PV, focusing in particular on residential customers. These three sources of uncertainty are: changes to electricity market conditions that would affect retail electricity prices, changes to the types of retail rate structures available to residential customers with PV, and shifts away from standard net-metering toward other compensation mechanisms for residential PV.

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This research is in press with Energy Policy. To see the published version, please click here.

Findings from this report were presented at the 31st USAEE/IAEE North American Conference in Austin, Texas in November, 2013. To download the proceedings posted online, click here.

Findings from this report were also presented at the American Solar Energy Society in Denver, Colorado in May, 2012. To download the proceedings posted online, click here.


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