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

Andrew Satchwell, Andrew Mills and Galen Barbose

Energy Policy, 2015, vol. 80, issue C, 133-144

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.

Keywords: Customer-sited PV; Utility profitability; Utility regulation; Utility ratemaking (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421515000622
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:80:y:2015:i:c:p:133-144

DOI: 10.1016/j.enpol.2015.01.043

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().