The Potential Impact of Increased Renewable Energy Penetration Levels on Electricity Bill Savings From Residential Photovoltaic Systems

Residential photovoltaic (PV) systems in the US are often compensated at the customer’s underlying retail electricity rate through net metering. Given the uncertainty in future retail rates and the inherent links between rates and the economics of behind-the-meter PV, there is growing interest in understanding how potential changes in rates may impact the value of bill savings from PV. In this paper, we first use a production cost and capacity expansion model to project hourly wholesale electricity market prices under three potential electricity market scenarios, using California as a case study. Scenarios investigated include different levels of PV, concentrated solar power (CSP), and wind penetrations in the electricity market. Second, based on the wholesale electricity market prices generated by the model, we develop retail rates (i.e. flat, time-of-use, and realtime pricing) for each future scenario based on standard retail rate design principles. Finally, based on these retail rates, the value of bill savings from PV is estimated for 226 California residential customers under two types of net metering, for each scenario. Results indicate that bill savings from residential PV can vary considerably depending on the temporal trends in wholesale market electricity prices. Under high solar penetration scenarios, we find that timevarying rates are degraded substantially during times of PV generation, reducing bill savings from PV for customers under those rates.