The impact of rate design and net metering on the bill savings from distributed PV for residential customers in California

Net metering has become a widespread mechanism in the U.S. for supporting customer adoption of distributed photovoltaics (PV), but has faced challenges as PV installations grow to a larger share of generation in a number of states. This paper examines the value of the bill savings that customers receive under net metering, and the associated role of retail rate design, based on a sample of approximately two hundred residential customers of California's two largest electric utilities. We find that the bill savings per kWh of PV electricity generated varies by more than a factor of four across the customers in the sample, which is largely attributable to the inclining block structure of the utilities' residential retail rates. We also compare the bill savings under net metering to that received under three potential alternative compensation mechanisms, based on California's Market Price Referent (MPR). We find that net metering provides significantly greater bill savings than a full MPR-based feed-in tariff, but only modestly greater savings than alternative mechanisms under which hourly or monthly net excess generation is compensated at the MPR rate.     

Feed-in tariff structure development for photovoltaic electricity and the associated benefits for the Kingdom of Bahrain

In this study, the feed-in tariff (FIT) scheme was considered to facilitate an effective introduction of renewable energy in the Kingdom of Bahrain. An economic model was developed for the estimation of feasible FIT rates for photovoltaic (PV) electricity on a residential scale. The calculations of FIT rates were based mainly on the local solar radiation, the cost of a grid-connected PV system, the operation and maintenance cost, and the provided financial support. The net present value and internal rate of return methods were selected for model evaluation with the guide of simple payback period to determine the cost of energy and feasible FIT rates under several scenarios involving different capital rebate percentages, loan down payment percentages, and PV system costs. Moreover, to capitalise on the FIT benefits, its impact on the stakeholders beyond the households was investigated in terms of natural gas savings, emissions cutback, job creation, and PV-electricity contribution towards the energy demand growth. The study recommended the introduction of the FIT scheme in the Kingdom of Bahrain due to its considerable benefits through a setup where each household would purchase the PV system through a loan, with the government and the electricity customers sharing the FIT cost.     

Customer-economics of residential photovoltaic systems (Part 1): The impact of high renewable energy penetrations on electricity bill savings with net metering

Residential photovoltaic (PV) systems in the US are often compensated at the customer's underlying retail electricity rate through net metering. Given the uncertainty in future retail rates and the inherent links between rates and the customer–economics of behind-the-meter PV, there is growing interest in understanding how potential changes in rates may impact the value of bill savings from PV. In this article, we first use a production cost and capacity expansion model to project California hourly wholesale electricity market prices under two potential electricity market scenarios, including a reference and a 33% renewables scenario. Second, based on the wholesale electricity market prices generated by the model, we develop 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 is estimated for 226 California residential customers under two types of net metering, for each scenario. We find 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.     

Conditions of energy efficient behaviour��a comparative study between Sweden and the UK

The main aim of this study is to compare how specific conditions in certain countries (in this case, the UK and Sweden) can stimulate or oblige householders to be more energy efficient, or can obstruct this. European goals for energy and emission reductions now constitute the main frame for long-term energy policy changes, but national governments develop and implement policy in contrasting ways and in different contexts. Important aspects are: geographical context, degree of liberalisation of electricity and gas industry, structure and composition of energy systems, metering and billing infrastructure, and the nature of electrical load problems. The following conditions are described and compared in this paper: (1) regulation to control residential consumption and emissions; (2) energy systems; (3) electricity pricing; (4) the role of utilities and other agents in residential demand reduction; (5) quality of feedback on energy use to the householder; and (6) customer behaviour and perceptions of energy use. The analysis is carried out with a view to ecological, economic and social aspects of energy systems. The comparison shows the significance of factors that are sometimes overlooked when considering the potential for demand reduction and load management, and produces some lessons and questions that are widely applicable.     

Residential PV capacity estimation and power disaggregation using net metering measurements

As the intermittency and uncertainty of photovoltaic (PV) power generation poses considerable challenges to the power system operation, accurate PV generation estimates are critical for the distribution operation, maintenance, and demand response program implementation because of the increasing usage of distributed PVs. Currently, most residential PVs are installed behind the meter, with only the net load available to the utilities. Therefore, a method for disaggregating the residential PV generation from the net load data is needed to enhance the grid-edge observability. In this study, an unsupervised PV capacity estimation method based on net metering data is proposed, for estimating the PV capacity in the customer’s premise based on the distribution characteristics of nocturnal and diurnal net load extremes. Then, the PV generation disaggregation method is presented. Based on the analysis of the correlation between the nocturnal and diurnal actual loads and the correlation between the PV capacity and their actual PV generation, the PV generation of customers is estimated by applying linear fitting of multiple typical solar exemplars and then disaggregating them into hourly-resolution power profiles. Finally, the anomalies of disaggregated PV power are calibrated and corrected using the estimated capacity. Experiment results on a real-world hourly dataset involving 260 customers show that the proposed PV capacity estimation method achieves good accuracy because of the advantages of robustness and low complexity. Compared with the state- of-the-art PV disaggregation algorithm, the proposed method exhibits a reduction of over 15% for the mean absolute percentage error and over 20% for the root mean square error.     

Feed-in tariff design for domestic scale grid-connected PV systems using high resolution household electricity demand data

The advent of large samples of smart metering data allows policymakers to design Feed-in Tariffs which are more targeted and efficient. This paper presents a methodology which uses these data to design FITs for domestic scale grid-connected PV systems in Ireland. A sample of 2551 household electricity demand data collected at 1/2-hourly intervals, electricity output from a 2.82 kW_p PV system over the same time interval as well as PV system costs and electricity tariffs were used to determine the required FIT to make it worthwhile for the households to invest in the PV system. The methodology shows that it is possible to design single, multiple and continuous FITs. Continuous FITs are the most efficient and result in no overcompensation to the housholder while single and multiple FITs are less efficient since they result in different levels of overcompensation. In the PV case study considered, it was shown that the use of three FITs (0.3170, 0.3315 and 0.3475 €/kW h) resulted in a 59.6% reduction in overcompensation compared to a single FIT of 0.3475 €/kW h; assuming immediate and complete uptake of the technology, this would result in NPV savings of over €597 m to the Irish government over a 25 year lifetime.     

The effect of current and prospective policies on photovoltaic system economics: An application to the US Midwest

This study models fundamental features of current and prospective policies encouraging adoption of residential photovoltaic (PV) systems. A key finding is that time-of-day (ToD) pricing can enhance or worsen the economics of PV systems. Moreover, increased responsiveness of electricity demand to its price diminishes the effectiveness of ToD pricing in the absence of net metering, but does not affect it otherwise. An application to plausible conditions in the State of Indiana, USA, shows that current policies are unlikely to trigger adoption by a risk-neutral forward-looking residential customer. However, adoption of PV systems can be induced if the Federal Tax Credit is increased to cover 48% of capital cost (instead of the current 30%), which could imply a cost to the Federal Government of about $0.95/kW of installed capacity depending on the panel’s size. We demonstrate that implementation of ToD pricing can trigger adoption under a range of on- and off-peak price combinations. But our analysis also shows that the cost-effectiveness of ToD pricing is enhanced at higher ratios of on-peak to off-peak prices.     

The economic effect of electricity net-metering with solar PV: Consequences for network cost recovery,cross subsidies and policy objectives

Net-metering is commonly known as a practice by which owners of distributed generation (DG) units may offset their electricity consumption from the grid with local generation. The increasing number of prosumers (consumers that both produce and consume electricity) with solar photovoltaic (PV) generation combined with net-metering results in reduced incomes for many network utilities worldwide. Consequently, this pushes utilities to increase charges per kW h in order to recover costs. For non-PV owners, this could result into inequality issues due to the fact that also non-PV owners have to pay higher chargers for their electricity consumed to make up for netted costs of PV-owners. In order to provide insight in those inequality issues caused by net-metering, this study presents the effects on cross-subsidies, cost recovery and policy objectives evolving from different applied netmetering and tariff designs for a residential consumer. Eventually this paper provides recommendations regarding tariffs and metering that will result in more explicit incentives for PV, instead of the current implicit incentives which are present to PV owners due to net-metering.     

Making the connection: The relationship between fuel poverty,electricity disconnection,and prepayment metering

Fuel poverty, or inability to afford adequate heating for a reasonable outlay of expenditure, is a significant and under-researched problem in New Zealand. The connection between fuel poverty, and electricity disconnection or ‘self-disconnection’ is analysed for four cities using prepayment metering to pay for electricity. A price comparison analysis on a government-sponsored website showed that prepayment metering was more expensive than other payment options. This website analysis was supplemented by qualitative data from older people with chronic respiratory disease expressing their views about electricity disconnection and prepayment metering. We show that prepayment metering for electricity is more expensive than other payment methods in New Zealand and that older people’s insights provide valuable context to these issues. Under the present payment schedule, the use of prepayment metering to pay for electricity is not a suitable policy instrument to address fuel poverty, which remains problematic. The deregulated electricity market continues to lead to increases in the real price of residential electricity and in the number of people in fuel poverty. We offer policy suggestions for reducing fuel poverty in New Zealand.     

Metering of agricultural power supply in West Bengal,India: Who gains and who loses?

As a part of the ongoing power sector reforms in India, the state of West Bengal is in the process of metering agricultural electricity supply. This paper presents a first cut assessment of this initiative. Results suggest that the majority of the pump owners benefit from the reforms in two ways: first by having to pay a lower electricity bill for same usage and second through increased profit margins by selling water. This is because in response to the changed incentive structure, water prices rose sharply by 30–50% immediately after metering. In contrast, water buyers have lost out by having to pay higher water charges and face adverse terms of contract. Impact of metering on operation of groundwater markets and volume of groundwater extracted is less clear; they may expand, contract or remain unchanged, though water use efficiency is likely to go up. At current tariff rates, the electricity utilities are likely to earn less revenue than before. These findings are context specific and hold good for West Bengal where high flat tariff had fostered competitive groundwater markets and hence cannot be generalised for other Indian states.     

Solar feed-in tariffs and the merit order effect: A study of the German electricity market

This study investigates the merit order effect (MOE) of the recent years' implementation of solar power in Germany. Market clearing electricity prices and production levels are compared for the years 2009–2011, and a model for the relationship between the electricity price and price sensitive electricity production is developed and applied to predict electricity prices in Germany from July 2010 to July 2011 with and without solar electricity generation (SEG). The results show that the SEG has caused a 7% reduction in average electricity prices for this period. The average daily maximum price and daily price variation are also found to decrease, by 13% and 23%, respectively. When taking the MOE into account the net consumer's cost of the solar feed-in tariff (FIT) system is found to be 23% less than the charge listed in the electricity bill. The German FIT policy for solar power has been subject to considerable public debate, and a common argument brought up in disfavor of the system is the high cost for the consumers. In this study we demonstrate the importance of including the MOE when evaluating the total costs and benefits of the FIT policy mechanism.     

The impact of transboundary haze pollution on household utilities consumption

This paper examines the causal effects of air pollution on the household consumption of water and electricity in Singapore. Using the transboundary haze pollution caused by forest fires in Indonesia as an exogenous shock, we find that increases in haze pollutant intensity in the air significantly increase water and electricity consumption. In particular, the intra-day and inter-day analyses on hourly household water consumption are consistent with the risk avoidance and the risk mitigation behaviors during severe haze episodes. During the haze periods, households stay indoors and avoid outdoor activities to minimize exposure to health risks. When they need to engage in outdoor activities during the weekdays, they increase efforts in mitigating health risks associated with air pollution. Moreover, the analysis of social media data shows that the level of public awareness of air pollution is positively related to energy consumption by households. In addition, the effects of haze-induced utilities consumption is correlated with the duration of air pollution. While household utilities consumption quickly returns to normal after transitory pollution exposure, the effects are stronger and persistent after a longer period of air pollution; households maintain a higher level of utilities consumption for two months after a lengthy haze, suggesting a substantial spending on additional water and electricity usage due to air pollution events.     

Organizing prosumers into electricity trading communities: Costs to attain electricity transfer limitations and self‐sufficiency goals

Among household electricity end users, there is growing interest in local renewable electricity generation and energy independence. Community‐based and neighborhood energy projects, where consumers and prosumers of electricity trade their energy locally in a peer‐to‐peer system, have started to emerge in different parts of the world. This study investigates and compares the costs incurred by individual households and households organized in electricity trading communities in seeking to attain greater independence from the centralized electricity system. This independence is investigated with respect to: (i) the potential to reduce the electricity transfer capacity to and from the centralized system and (ii) the potential to increase self‐sufficiency. An optimization model is designed to analyze the investment and operation of residential photovoltaic battery systems. The model is then applied to different cases in a region of southern Sweden for year 2030. Utilizing measured electricity demand data for Swedish households, we show that with a reduced electricity transfer capacity to the centralized system, already a community of five residential prosumers can supply the household demand at lower cost than can prosumers acting individually. Grouping of residential prosumers in an electricity trading community confers greater benefits under conditions with a reduced electricity transfer capacity than when the goal is to become electricity self‐sufficient. It is important to consider the local utilization of photovoltaic‐generated electricity and its effect on the net trading pattern (to and from the centralized system) when discussing the impact on the electricity system of a high percentage of prosumers.     

Distributed generation: An empirical analysis of primary motivators

What was once an industry dominated by centralized fossil-fuel power plants, the electricity industry in the United States is now evolving into a more decentralized and deregulated entity. While the future scope and scale of the industry is not yet apparent, recent trends indicate that distributed generation electricity applications may play an important role in this transformation. This paper examines which types of utilities are more likely to adopt distributed generation systems and, additionally, which factors motivate decisions of adoption and system capacity size. Results of a standard two-part model reveal that private utilities are significantly more inclined to adopt distributed generation than cooperatives and other types of public utilities. We also find evidence that interconnection standards and renewable portfolio standards effectively encourage consumer-owned distributed generation, while market forces associated with greater market competition encourage utility-owned distributed generation. Net metering programs are also found to have a significant marginal effect on distributed generation adoption and deployment.     

Air-conditioning Australian households: The impact of dynamic peak pricing

International mandates for smart metering are enabling variable and real-time pricing regimes such as dynamic peak pricing (DPP), which charges 10–40 times the off-peak rate for electricity during short periods. This regime aims to reduce peak electricity demand (predominantly due to increase in residential air-conditioning usage) and curb greenhouse gas emissions. Although trials indicate that DPP can achieve significant demand reductions, particularly in summer, little is known about how or why households change their cooling practices in response to this strategy. This paper discusses the outcomes of a small qualitative study assessing the impact of a DPP trial on household cooling practices in the Australian state of New South Wales. The study challenges common assumptions about the necessity of air-conditioning and impact of price signals. It finds that DPP engages households as co-managers of their cooling practices through a series of notification signals (SMS, phone, in-home display, email, etc.). Further, by linking the price signal to air-conditioning, some householders consider this practice discretionary for short periods of time. The paper concludes by warning that policy makers and utilities may serve to legitimise air-conditioning usage and/or negate demand reductions by failing to acknowledge the non-rational dynamics of DPP and household cooling practices.     

Photovoltaic grid stabilization system using second life lithium battery

The operation of residential solar photovoltaic arrays are typically dependent on net energy metering (NEM) tariffs or feed in tariffs that allow the array owner to treat the electricity grid as an energy storage device. This study presents a model and simulation results of a photovoltaic array paired with a second life battery pack, a partially degraded lithium battery pack from an automotive application, for stabilizing the electricity grid interactions of residential photovoltaic systems and reducing the overall residential demand placed on the electricity grid. Two numerical simulations are performed on the operation of a second life battery pack. The first used an equivalent system model for the battery pack and measured solar production and residential loads to evaluate the system performance using one second time steps. The second model used hourly time steps and round trip efficiency for the battery, coupled with weather data and residential demand, to determine the system performance over the course of a year. The numerical investigation shows that the PV and battery system can substantially reduce the quantity of solar electricity that is exported to the distribution grid and decrease the impacts of sudden fluctuations in photovoltaic output due to cloud cover while providing significant reductions in the electricity demand placed on the grid. Copyright © 2015 John Wiley & Sons, Ltd.     

Government policy and industrial investment in cogeneration in the USA

This paper presents an economic analysis of investment in cogeneration in selected industries and assesses the impact of investment tax credits policy directed at cogeneration. We use a dynamic partial equilibrium model that is derived under the assumption that investment in cogeneration occurs if and when the annualized cost of the incremental investment is less than the annualized benefits of avoiding electricity purchase from the utilities. Policy simulations show that investment in cogeneration is economically feasible even without the tax credits; the tax credit policy marginally increases investment in cogeneration. The welfare distortions and revenue loss to the US Treasury are also estimated. External benefits required per barrel of oil to offset distortion costs would come to $2.83.     

Social norms,trust and control of power theft in Uganda: Does bulk metering work for MSEs?

Power theft is still rampant in many developing countries. Governments and utility providers tend to favor technical solutions, neglecting the socio-economic dimension. This article analyzes the interaction between the socio-economic factors trust, informal social norms, awareness and electricity pricing effect and technical control measures in Uganda. After reforming its power sector, Uganda introduced two technical innovations: bulk metering for micro and small enterprises (MSE) and prepaid metering for households. The bulk metering system imposes a strong form of social control among MSEs. Drawing on semi-structured interviews with 29 MSEs and 16 experts in Uganda, this article shows how well bulk metering works in practice. It finds that trust is key in the relations between electricity user and utility provider, between citizens and government overseeing the energy sector as well as within bulk metering groups of MSEs. The electricity price impacts MSEs' ability to pay and to some extent also their willingness to pay. Finally, power theft used to be accepted as an informal social norm. Change is happening, but is currently undermined by corruption and patronage networks in the energy sector and the political system, impacting people's attitude to compliance – regardless of the privatization of the electricity sector.     

Residential- and commercial-scale distributed wind energy in North Dakota,USA

We use one year of hourly wind speed measurements at 14 sites across North Dakota to evaluate how both residential- and commercial-scale (utility-scale) wind turbines can help to meet electricity needs within the state. Data are available from April 2004 through March 2005, a period with slightly lower mean wind speeds as compared to a long-term climatology; thus our calculations represent a conservative estimate of wind power for these sites. We assume the wind patterns at each site are representative of the county as a whole and, using capacity factors of 20% (residential) and 35% (commercial), we estimate the amount of electricity that can be generated for the county and compare it to county-based estimates of electricity usage. Our results show that a residential-scale turbine could provide between 90% and 165% of annual net per-person electricity usage in these 14 counties, depending on the wind speed. In addition, for the counties with the smallest populations, only six commercial-scale turbines are needed to meet the net annual county electricity usage; the most populous county would require up to 69 turbines. An evaluation of month-to-month electricity supply and demand showed that between 9% and 20% (13% and 29%) of monthly electricity needs for a county with low (high) average wind speeds could be met if 30% of the county's households had a residential-scale turbine. Our results show that residential-scale turbines have the potential to contribute meaningfully to a distributed-generation wind energy landscape.     

Unintended outcomes of electricity smart-metering: trading-off consumption and investment behaviour

Smart-metering allows electricity utilities to provide consumers with better information on their energy usage and to apply time-of-use pricing. These measures have been shown to reduce electricity consumption and induce time-shifting of demand. Less is known about how they affect residential energy efficiency investment behaviour. We use data from a randomised-controlled trial on a sample of almost 2500 Irish consumers, conducted over a 12-month period to investigate the effect of smart-metering and residential feedback on household investment behaviour. The results show that exposure to time-of-use pricing and information stimuli, while reducing overall and peak usage, can also have the unintended effect of reducing investment in energy efficiency measures within the home. Our findings indicate that households exposed to treatment were less likely to adopt any energy saving measure (23–28 % on average), and those households adopted less energy saving features than those in the control group (15–21 % on average). This result highlights the potential for behavioural interventions to have unintended consequences on behaviours other than those specifically targeted. Furthermore, it underlines the importance of examining a wider range of outcomes and allowing longer time-scales when evaluating this type of experiment.