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Impact of fuel-dependent electricity retail charges on the value of net-metered PV applications in vertically integrated systems

Author

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  • Nikolaidis, Alexandros I.
  • Milidonis, Andreas
  • Charalambous, Charalambos A.

Abstract

Retail electricity charges inevitably influence the financial rationale of using net-metered photovoltaic (PV) applications since their structure as well as their level may vary significantly over the life-cycle of a customer-sited PV generation system. This subsequently introduces a further uncertainty for a ratepayer considering a net-metered PV investment. To thoroughly comprehend this uncertainty, the paper employs a top-down approach – in vertically integrated environments – to model the volatility of partially hedged electricity charges and its subsequent impact on the value of bill savings from net-metered PV systems. Besides the utility's pricing strategy and rate structures, particular emphasis is given in modeling the fossil fuel mix component that introduces a significant source of uncertainty on electricity charges and thus on the value of bill savings of net-metered, customer-sited, PV applications.

Suggested Citation

  • Nikolaidis, Alexandros I. & Milidonis, Andreas & Charalambous, Charalambos A., 2015. "Impact of fuel-dependent electricity retail charges on the value of net-metered PV applications in vertically integrated systems," Energy Policy, Elsevier, vol. 79(C), pages 150-160.
    • Handle: RePEc:eee:enepol:v:79:y:2015:i:c:p:150-160
    DOI: 10.1016/j.enpol.2015.01.010
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    References listed on IDEAS

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    1. Janczura, Joanna & Weron, Rafal, 2010. "Modeling electricity spot prices: Regime switching models with price-capped spike distributions," MPRA Paper 23296, University Library of Munich, Germany.
    2. Mills, Andrew & Wiser, Ryan & Barbose, Galen & Golove, William, 2008. "The impact of retail rate structures on the economics of commercial photovoltaic systems in California," Energy Policy, Elsevier, vol. 36(9), pages 3266-3277, September.
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    4. Darghouth, Naïm R. & Barbose, Galen & Wiser, Ryan, 2011. "The impact of rate design and net metering on the bill savings from distributed PV for residential customers in California," Energy Policy, Elsevier, vol. 39(9), pages 5243-5253, September.
    5. Cai, Desmond W.H. & Adlakha, Sachin & Low, Steven H. & De Martini, Paul & Mani Chandy, K., 2013. "Impact of residential PV adoption on Retail Electricity Rates," Energy Policy, Elsevier, vol. 62(C), pages 830-843.
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    Cited by:

    1. Georgios C. Christoforidis & Ioannis P. Panapakidis & Theofilos A. Papadopoulos & Grigoris K. Papagiannis & Ioannis Koumparou & Maria Hadjipanayi & George E. Georghiou, 2016. "A Model for the Assessment of Different Net-Metering Policies," Energies, MDPI, vol. 9(4), pages 1-24, April.
    2. Nikolaidis, Alexandros I. & Charalambous, Charalambos A., 2017. "Hidden financial implications of the net energy metering practice in an isolated power system: Critical review and policy insights," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 706-717.
    3. Bustos, Cristian & Watts, David & Ayala, Marysol, 2017. "Financial risk reduction in photovoltaic projects through ocean-atmospheric oscillations modeling," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 548-568.
    4. Vassilis Stavrakas & Nikos Kleanthis & Alexandros Flamos, 2020. "An Ex-Post Assessment of RES-E Support in Greece by Investigating the Monetary Flows and the Causal Relationships in the Electricity Market," Energies, MDPI, vol. 13(17), pages 1-29, September.

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