The biggest impact on the future of rooftop solar will be electric utility rate design, according to a report out from the U.S. Department of Energy’s Lawrence Berkeley National Laboratory. The report finds that how retail electric rates are structured can dramatically impact how much solar is adopted.
“We find that retail rate design can have a dramatic impact on PV deployment levels,” says report author Naïm Darghouth, a researcher in Berkeley Lab’s Energy Technologies Area.“Understanding the deployment impacts of potential reforms to rate design and net metering will be critical for regulators and other decision makers as they consider changes to retail rates, given the continued role of PV in advancing energy and environmental policy objectives and customer choice. This report makes a unique contribution by quantitatively assessing these possible deployment impacts,” explains co-author Galen Barbose.
Depending on mechanisms employed in rate structures for residential and commercial solar power the total national PV deployment rate could be increased up to 8 percent by 2050—or it could be decreased by roughly 61 percent by 2050. It’s all dependent on how utilities and regulators structure future rate reimbursement schemes to compensate homes and businesses for the solar power they put on the grid. What’s scary is that utilities are looking into rate schemes that could reduce the amount of distributed solar so significantly.
The utilities are worried that increased rooftop solar deployment under certain schemes would lead to “a death spiral” wherein the utilities are forced to raise rates on all customers to recover the costs of installing more distributed solar power, hence creating a system where even more customers want to go solar to avoid additional costs imposed by the utility.
On the other hand, utilities could quash distributed solar growth with other schemes. At the more extreme level, the report found that a $50 a month charge on a solar system connected to the grid could reduce rooftop solar by roughly 61 percent in 2050 (Arizona’s Salt River Project already made some changes that could charge solar customers that much a month.). That could have a death spiral impact on the rooftop solar installation business.
“Our study shows that—at least on a national basis—these two feedback effects largely counteract one another. As such, current discussions that focus largely on the fixed-cost recovery feedback miss an important and opposing feedback mechanism that can in many circumstances moderate the issue of concern,” notes Berkeley Lab’s Ryan Wiser, a co-author on the report.Tweet