Residential photovoltaic (PV) systems in the US are often compensated at the customer's underlying retail electricity rate through net metering. There is growing interest in understanding how potential changes in rates may impact the value of bill savings from PV. This article uses a production cost and capacity expansion model to project California hourly wholesale electricity market prices under a reference scenario and a 33% renewables scenario. Second, based on the wholesale electricity market prices generated by the model, the article develops retail rates (i.e., flat, time-of-use, and real-time pricing) for each future scenario based on standard retail rate design principles. Finally, based on these retail rates, the bill savings from PV are estimated for 226 California residential customers under two types of net metering, for each scenario. The article finds that high renewable penetrations can drive substantial changes in residential retail rates and that these changes, together with variations in retail rate structures and PV compensation mechanisms, interact to place substantial uncertainty on the future value of bill savings from residential PV.

DateApril 2014                                                                                                                                                                                                                                      
TopicCodes, Standards & Utility Policies; Solar Basics & Educating Consumers
SubprogramSoft Costs
AuthorLawrence Berkeley National Laboratory

http://emp.lbl.gov/publications/customer-economics-residential-photovoltaic-systems-part-1-impact-high-renewable-energy