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Quantifying the financial impacts of net-metered PV on utilities and ratepayers

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  • Satchwell, Andrew
  • Mills, Andrew
  • Barbose, Galen

Abstract

Deployment of customer-sited photovoltaics (PV) in the United States has expanded rapidly in recent years, driven by falling PV system prices, the advent of customer financing options, and various forms of policy support at the federal, state, and local levels. With the success of these efforts, heated debates have surfaced in a number of U.S. states about the impacts of customer-sited PV on utility shareholders and ratepayers. We performed a scoping analysis using a financial model to quantify the financial impacts of customer-sited PV on utility shareholders and ratepayers and to assess the magnitude of these impacts under alternative utility conditions. We find that customer-sited PV generally reduces utility collected revenues greater than reductions in costs leading to a revenue erosion effect and lost future earnings opportunities. We also find that average retail rates increase as utility costs are spread over a relatively smaller sales base. We analyze these results under various assumptions about utility operating and regulatory environments and find that these impacts can vary greatly depending upon the specific circumstances of the utility. Based on this analysis, we highlight potential implications for policymakers and identify key issues warranting further analysis.

Suggested Citation

  • Satchwell, Andrew & Mills, Andrew & Barbose, Galen, 2015. "Quantifying the financial impacts of net-metered PV on utilities and ratepayers," Energy Policy, Elsevier, vol. 80(C), pages 133-144.
    • Handle: RePEc:eee:enepol:v:80:y:2015:i:c:p:133-144
    DOI: 10.1016/j.enpol.2015.01.043
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    References listed on IDEAS

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    1. Satchwell, Andrew & Cappers, Peter & Goldman, Charles, 2011. "Carrots and sticks: A comprehensive business model for the successful achievement of energy efficiency resource standards," Utilities Policy, Elsevier, vol. 19(4), pages 218-225.
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