Value of Solar. Program Design and Implementation Considerations

Abstract

this document, VOS rate and VOS tariff are used interchangeably to refer to the amount (number) that is being paid by the utility for solar generation by self-generating customers. The term VOS mechanism is used to refer to the policy or program in the broader sense. 2 Few studies, to date, have included cost components in the calculation of the VOS rate. The analysis conducted for this report is based on the most commonly discussed value components and does not include the costs of solar to the electricity system. 3 The goal of this report is not to estimate the VOS rate or "number" for any value component in any particular location. Research by NREL, Clean Power Research (CPR), Electric Power Research Institute (EPRI), Rocky Mountain Institute (RMI), and Interstate Renewable Energy Council (IREC) lays the foundation for performing VOS rate calculations; summaries of some existing VOS rate calculation research are presented in the Appendix A. vi This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. for only the net excess generation that is fed back to the utility (that is, to subtract out any generation that is consumed on-site). The stakeholders in a VOS rate program have various interests and concerns, some shared and some individual. The utilities, regulators, and electricity customers all have an interest in the provision of reliable electric service that meets electricity demands into the future. Solar generation, being a local supply of power with no fuel cost, offers some future reliability benefit. Utilities will benefit from a VOS program that is straightforward to manage, a characteristic that can be considered during VOS program design. Utilities also may want to recover the costs of providing fixed-cost services (such as transmission and distribution) to their customers. A "buyall, sell-all" VOS program design separates the utility's compensation for solar generation from the customer's purchase of retail electricity, which can allow for full recovery of utility fixed costs. Policymakers have an interest in ensuring that the utility receives payment for the services that it provides and that cross-subsidies between solar and non-solar customers are minimized. They also may want to address increasing customer demand for distributed solar and to capture the associated environmental benefits. The DGPV owner is interested in having a long-term agreement to receive payment for solar generation that (at least) covers the cost of solar investment. The PV system generation purchaser/owner can benefit from the hedge that fixedcost solar electricity can provide from future increases in retail rates. By being alert to the existing market for solar, and adding interim support mechanisms to the VOS rate, if necessary, policy makers can support continued solar develop and address customer interests. x

State and Local Policy Impacts on the Residential Solar PV Installation Industry

“…Similarly, New Hampshire moved from a full retail rate requirement to an avoided-cost requirement in 2012. In these cases, the avoided cost was assumed to equal the average wholesale electricity price (Taylor et al 2015), based on wholesale price data from the EIA. 9 In Massachusetts, export PV output must be compensated at "slightly less than the utility's full retail rate" (NC CETC 2018).…”

Stakeholders’ Perspectives of Design Options for a Rooftop Solar PV Self-consumption Scheme in Thailand

“…As a consequence, the value of the solar tariff has been introduced in the U.S. in order to compensate for real value provided by the solar installations to the electricity system. Since this program was approved, Minnesota and Hawaii have applied after first rejecting net metering schemes [23][24]. However, in Switzerland, even though the issue of financing the grid have been debated, no additional grid charges have been made to PV system owners [5].…”

Forecasting residential solar photovoltaic deployment in California

“…This research adopts the standard approach of calculating PV economics developed by national laboratories in the United States. Third, the VOS has become a new metric to measure the contribution of DGPV to the grid system and provide an appropriate subsidy level to PV customers (Farrell 2014;Rábago et al 2012;Taylor et al 2015); therefore, this research builds on this relevant literature and evaluates the potential impact of this new compensation scheme on PV adoption.…”