Powering your home with clean energy generated from the solar panels on your roof and selling the excess energy to the utility are appealing prospects to those attuned to environmental, energy efficiency, and self-sufficiency considerations. It is not hard to see why solar distributed generation (“DG”) has moved into the social and political electricity spotlight over the past several years. Solar DG has energy value, the potential for reducing transmission costs and, under the right circumstances, capacity value. However, the best way to implement solar DG remains up for debate.
In many states, including Pennsylvania, a system of retail net metering is currently in place. Solar DG customers pay full retail value for all energy taken off the grid, pay nothing for energy or distribution when self-consuming energy produced on the premises, and are paid the fully delivered retail price for all energy exported into the system. Under the retail net metering system, subsidies of solar DG hosts result in increased costs borne either by the utilities or by customers who do not host solar DG systems. In practice, there is evidence of cost-shifting to non-solar DG residential customers, who are often less affluent than solar DG hosts.
In a paper published in this month’s edition of The Electricity Journal, co-authored with Ashley Brown (Boston), we examine the value of solar DG as compared to other renewable energy sources and proffer an alternative pricing schema that may incentivize solar and reflect its value, while limiting cost-shifting. To read Valuation of Distributed Solar: A Qualitative View, 27 The Electricity J. 10 27-48 (2014), click here.