Value Of solar literature review/Development of an economical model to determine an appropriate feed-in tariff for grid-connected solar PV electricity in all states of Australia

Development of an economical model to determine an appropriate feed-in tariff for grid-connected solar PV electricity in all states of Australia[edit | edit source]

Development of an economical model to determine an appropriate feed-in tariff for grid-connected solar PV electricity in all states of Australia'

• This paper describes the formulation of an economical model and a computer simulation to determine the accurate unit price of grid-connected roof-top solar photovoltaic (PV) electricity for all the states of Australia.
• Sun data produced by the Australian Bureau of Meteorology has been used to produce accurate results.
• Three radiation states are considered for each state and a rate is calculated for each state, after considering the perks provided by the government to consumers installing PV.
• Rates are calculated for two possibilities -in which financial support is provided by the government and a case in which it is not.
• In conclusion, the paper presents FIT for the state of Victoria and compares it to the cost consumers currently pay.
• It also recommends that there should not be a uniform FIT throughout the country as radiation levels are different in different geographical locations.
• It also concludes that the financial sops provided by the government need to be in accordance with a specific place's geographic location.

Distributed generation and distribution pricing: Why do we need new tariff design methodologies?[edit | edit source]

Distributed generation and distribution pricing: Why do we need new tariff design methodologies?

• This paper presents a systematic review of the different challenges posed by an increasing amount of distributed generation within the distribution tariff design.
• It reviews different distribution tariff options for distributed generation in different countries.
• A review of the most relevant methodologies proposed in the literature to include distributed generation into the tariff design is also presented.
• Recommendations on how to address the open issues with respect to tariff design and distributed generation are then presented in conclusion.

The economic effect of electricity net-metering with solar PV: Consequences for network cost recovery, cross subsidies and policy objectives[edit | edit source]

The economic effect of electricity net-metering with solar PV: Consequences for network cost recovery, cross subsidies and policy objectives

• The increasing number of prosumers(consumers that both produce and consume electricity) with solar photovoltaic (PV) generation combined with net-metering results in reduced incomes for many network utilities worldwide. Consequently, this pushes utilities to increase charges per kW h in order to recover costs.
• For non-PV owners, this could result into inequality issues due to the fact that also non-PV owners have to pay higher chargers for their electricity consumed to make up for netted costs of PV-owners.
• In order to provide insight in those inequality issues caused by net-metering, this study presents the effects on cross-subsidies, cost recovery and policy objectives evolving from different applied net metering and tariff designs for a residential consumer.
• Eventually this paper provides recommendations regarding tariffs and metering that will result in more explicit incentives for PV, instead of the current implicit incentives which are present to PV owners due to net-metering.
• Net-metering presents an important dilemma between incentivizing distributed generation (DG) on one side and securing financial stability of the Distribution System Operator(DSO)on the other.
• This paper has presented a study to provide insight into the dynamics that result from different types of net-metering methods and the impact on DSO incomes,policy objectives and increasing cross subsidies between network users.This study has been carried out using hourly consumption and production data for a low voltage network user in Spain with a Madrid based photovoltaic (PV) panel of 2 kWp capacity.

Overall review of renewable energy tariff policy in China: Evolution, implementation, problems and countermeasures[edit | edit source]

Overall review of renewable energy tariff policy in China: Evolution, implementation, problems and countermeasures

• This paper introduces the current development situation of renewable energy, analyzes the evolution and implementation effect of the renewable energy tariff policy and discusses the problems of the renewable energy tariff policy in China. On this basis,this article has proposed feasibility tariff policy recommendations to solve the problems.
• China's total energy supply from renewable energy demonstrated an average annual growth rate of about 12% between 2000 and 2010 and substituted 293 million t of coal equivalents by the end of that period. This necessitated a proper tariff structure in order to make sure renewable energy was properly valued.
• The "Solar power development in the 12th Five-Year Plan" clearly defines the specific objectives of solar photovoltaic for the future. The solar power capacity will reach more than 21 million kW and the annual generation capacity will achieve 25 billion kW by 2015,including 10 million kW of total installed capacity of distributed photovoltaic power generation,10 million kW of total installed capacity of grid connected photovoltaic power generation capacity and 1 million kW of total installed capacity of solar thermal power.
• Tariffs of solar power in China have experienced four stages: approval tariff stage, bidding price stage and fixed price stage.
• The lack of necessary supporting policies in the valuation of solar power leads to bidding wars among private entities which leads to a serious deviation from the actual cost.
• With the limitations of solar resources,the investment recovery period of solar power generation projects in eastern China is longer compared with western China,which hinders the development of photovoltaic power generation in that region.
• The authors state that policy-makers need to refine attractive pricing policies and adjust the price at any time based on the changes of the cost of power generation.

Assessment of the minimum value of photovoltaic electricity in Italy[edit | edit source]

Assessment of the minimum value of photovoltaic electricity in Italy

• This paper aims to assess the value of photovoltaic electricity in Italy, which is considered as an economically viable energy source in the medium and long term. A unique national hourly wholesale electricity price (PUN) is formed on the day-ahead market starting from the separate prices formed in several interconnected zones.
• The analysis has been limited to the so called "peakhours," that is, 8 AM to 8 PM CET during the workingdays around the year, while neither weekends nor national holidays were included due to the much lower power demand which, by means of the usual merit order mechanism, leads to the PUN formation quite similar to night time, therefore adding inhomogeneity to the analysis.
• A multivariate regression model was chosen for the peak PUN series due to its simplicity, repeatability, stability,and successful use in related studies.
• The values found by the authors is in line with related studies of near mature renewable energy markets.

The impacts of commercial electric utility rate structure elements on the economics of photovoltaic systems[edit | edit source]

The impacts of commercial electric utility rate structure elements on the economics of photovoltaic systems

• This analysis uses simulated building data, simulated solar photovoltaic (PV) data, and actual electric utility tariff data from 25 cities to understand better the impacts of different commercial rate structures on the value of solar PV systems. By analyzing and comparing 55 unique rate structures across the United States, this study seeks to identify the rate components that have the greatest effect on the value of PV systems.
• PVrate which is an MS-Excel based tool uses 15-minute or hourly data on building load and system production, as well as energy and demand charge information from a utility tariff sheet (usually available either online or by request). The building load data are chronologically aligned with the PV production data to determine the reduction in demand for each time segment. The tool then matches each time segment to the electricity rate that is applicable during that time to determine the energy and demand charges. The tool summarizes the energy, demand, and cost savings for each time segment, allowing for the identification of the beneficial components in each rate structure with regard to the PV system.
• The load profile data used in this analysis were initially created in part for the DOE commercial building benchmark models (Torcellini et al. 2008) simulated using the EnergyPlus simulation software.
• The PV production data used in this analysis were simulated using the typical meteorological year 28 (TMY2) dataset of the National Solar Radiation Database (NSRDB) (Marion and Urban 1995).
• The primary metric used in this analysis is the PV savings metric, defined as the fraction of the annual electricity cost saved by the PV system:

PV savings = (electric bill without PV – electric bill with PV)/(electric bill without PV)*100%.

• Common rate structure elements that appear to increase the value of PV include:

1. TOU tariffs with peak pricing that is well correlated with PV production
2. TOU tariffs that have a wide range between off-peak prices and peak prices
3. Seasonal flat tariffs that have a relatively higher price in the summer than winter

• Alternately, tariffs with demand charges tend to decrease the value of PV production. It was shown that PV systems, on average, have a relatively low capacity value, making them less attractive under rates with heavy demand charges.
• The results also indicate that although TOU rates are generally more beneficial to buildings with PV systems, some TOU rates are less beneficial than others are due to undesirable correlation between peak pricing and PV production.

Strategies to mitigate declines in the economic value of wind and solar at high penetration in California[edit | edit source]

Strategies to mitigate declines in the economic value of wind and solar at high penetration in California

• This paper evaluates several options to stem the decline of solar and PV energy value.
• The authors previously conducted a case study in California which concluded that the value of solar decreased when penetration increased.
• The paper suggests that low-cost bulk energy storage systems are a way of stemming the decrease in PV energy values.

Renewable financial support systems and cost-effectiveness[edit | edit source]

Renewable financial support systems and cost-effectiveness

• This paper analyses the performance of 'market-based' and 'feed-in tariff' systems of renewable energy procurement, and comments on the impact of different procurement systems on investment in renewable energy.
• The author's main aim is to assess the effectiveness of the UK's 'Renewable Obligation' (RO) in achieving two key objectives; first the cost effective deployment of renewable energy, and second, an effective partnership with business at both the trans-national level and at the local level. The 'Renewables Obligation' (RO) penalises electricity suppliers which do not meet their quota for supplying renewable electricity.
• A comparison is made between FIT and a pan-European green electricity market in green electricity certificates.
• The author also doubts if stances taken by the neo-liberal side, who support a green electricity market rather than FIT aren't rooted solely in neo-liberal utopia of a globalised market without examining and/or proposing proper supporting measures to make sure their ideological thoughts are implementable in practicality.
• The article finds that FIT tariff used in Germany is more cost-effective than the British RO.
• The author also finds through analysis that different geographical locations may require different pricing strategies to ensure wide-spread adoption of renewable energy.

Why are residential PV prices in Germany so much lower than in the United States?[edit | edit source]

Why are residential PV prices in Germany so much lower than in the United States?

• This document presents an analysis of why PV prices in Germany are far lower than that in the United States.
• The authors performed extensive existing literature review and empirical research with 2 surveys of German residential PV installers.
• The authors state that their analysis is only meant as a "first cut" and that further analysis in the pin-pointed areas would lead to more specific results.
• The probable reasons found in the analysis are as follows:

1. "Value-based pricing" in the U.S. (e.g., associated with more generous subsidies and/or less competition among installers)
2. Preference for premium products in the U.S.
3. Lower customer-acquisition costs in Germany due to simpler/more certain value proposition (FiT), critical mass of demand, and economies of scale
4. Lower installation labor costs in Germany due to greater experience and economies of scale
5. Lower permitting costs in Germany due to fewer requirements and greater standardization
6. Less onerous electrical requirements and interconnection processes in Germany

• A few measures were suggested to reduce PV prices in the United States, which are as listed below:

1. A large and durable market size
2. A concentrated market (which would minimize fragmentation)
3. A simple, transparent, certain incentive structure / value proposition
4. Simple interconnection, permitting, and inspection requirements
5. Regular incentive declines to drive & follow cost reduction

A few suggested research areas have also been outlined in this document which could lead to a better understanding of the topic:

1. Initiate a more refined analysis of overhead costs and margins among installers
2. Better understand the pricing decision of installers and competition between installers (i.e., degree of "value-based pricing")
3. Further investigate installation practices and differing regulatory requirements (usage of grounding, roof-penetration and conduits)
4. Compare supply-chain margins between the two countries and average prices paid by installers for modules and inverters
5. Assess the role of FIT policies in Germany in stimulating price reductions and potential implications for U.S. solar policy

Valuation of Distributed Solar: A Qualitative View[edit | edit source]

Valuation of Distributed Solar: A Qualitative View

• This paper assesses the value of distributed generation (DG) and to evaluate if the pricing policies being adopted are pushing the development of DG in an equitable direction.
• It states that net metering for residential users leads to cross subsidies which are unfair.
• Net metering also lets DG users get away with not paying their fair share of transmission fees despite using conventional grid energy when solar energy is not readily available.
• Net metering is termed as being unfair and not reflective of the true cost of solar power.
• It proposes the following criteria must be taken into account for coming up with a Value of Solar tariff :

1. Capacity value
2. Availability and reliability
3. Solar DG does not avoid transmission costs
4. Solar DG does not avoid distribution costs

• It concludes by opining that solar DG is a very valuable resource but if it is not properly priced taking into account its ill-effects as well as advantages, then it would be counterproductive to solar DG in the future.

The Value of Solar tariff: Net Metering 2.0[edit | edit source]

The Value of Solar tariff: Net Metering 2.0

• This paper strongly endorses the need for adopting the Value of Solar Tariff (VOST) in order to encourage more and more solar to be installed.
• The author notes three points which would be the hallmark of an ideal tariff system, which are :

1. A distributed solar tariff should be fair to the utility and to non-solar customers
2. The ideal solar tariff should fairly compensate the solar customer
3. The tariff should recover costs and give compensation credit for value independently from an incentive designed to overcome market failures
4. An ideal distributed solar tariff would operate as a complement to other electricity policy goals, including, especially, a goal of more efficient use of energy
5. An ideal distributed solar tariff should be intuitively sound and administratively simple to implement and manage

• Although net metering is described as a breakthrough in energy policy at that time, it has its own drawbacks.
• The VOST tariff structure formulated by Austin Energy is praised as a good example of a solar tariff structure which tries to accommodate all concerned factors.

A Rising Tension: 'Value-of-Solar' Tariff Versus Net Metering[edit | edit source]

A Rising Tension: 'Value-of-Solar' Tariff Versus Net Metering

• This article details the conflict between two groups with regards to which tariff system is better, net metering or Value of Solar Tariff (VOST).
• The Alliance for Solar Choice (TASC), which is made up of leading solar service providers, is a staunch supporter of net metering.
• It believes that net metering is a stable and highly successful policy and that it needs to be maintained and not fixed.
• Electric utilities feel net metering is unfair as it shifts the transmission infrastructure maintenance costs to non-solar users.
• A VOST advocate defends VOST as having the following benefits:

1. Avoiding the purchase of energy from other, polluting sources
2. Avoiding the need to build additional power plant capacity to meet peak energy needs
3. Providing energy for decades at a fixed price
4. Reducing wear and tear on the electric grid, including power lines, substations, and power plants

Harnessing The Power Of The People Through "Value Of Solar"... And Beyond[edit | edit source]

Harnessing The Power Of The People Through "Value Of Solar"... And Beyond

• This article details the brewing debate in various solar-leading countries over net metering versus value of solar tariff.
• It advocates the need for utilities to give monetary credit to customer behavior which impacts the grid in a positive way.
• It also supports assigning value to various distributed energy resources like energy efficiency, demand response or energy storage.
• It opines that instead of waiting for the next clean energy fight to boil up, states should consider looking beyond the value of individual technologies, and redesign power rates to take advantage of diverse customer resources and energy innovations.

Value of Solar Methodology[edit | edit source]

Value of Solar Methodology

• This document explains in detail a procedure to calculate the value of solar.
• It has been formulated by Clean Power Research.
• A different methodology has been proposed for Iowa, Michigan and Wisconsin.

A rational look at the value of solar[edit | edit source]

A rational look at the value of solar

• This article stresses the importance of not blindly comparing VOS rates of different studies.
• It asks for a rational outlook on the various factors that might be affecting the rates in these different methods.
• Hence, VOS rates must not be compared strictly based on their exact monetary value and a holistic outlook is needed.
• A case study is described which encompasses two VOS rates calculated by two different entities and in the process getting different results.
• VOS value differences depend on the following factors - the analysis framework, the cost/benefit categories and the input assumptions.
• Another case study conducted in Maine is presented which also reported a difference in VOS values.

In conclusion, the author feels it would be helpful to rationally assess the various VOS rates and then make a decision which would be in the best interests of the solar industry.

==A New "Sunshine State"?Evaluating Minnesota's Value of Solar Tariff Methodology== A New "Sunshine State"?Evaluating Minnesota's Value of Solar Tariff Methodology

• This paper presents an evaluation of Minnesota's VOST methodology.
• It details the importance of VOS and hails it as a necessary breakthrough in energy policy while going into detail about what factors the VOS takes into consideration.
• It also identifies a few shortcomings in the VOS methodology.
• The greatest shortcoming of Minnesota's VOST methodology ironically stems from one of its most appealing characteristics.VOST purports to offer a rate between the utility's avoided-cost and retail rates.Unfortunately,reports indicate that the VOST rate exceeds present retail rates for residential end users.
• Another shortcoming identified is the VOST's inability to distinguish itself from Minnesota's existing net metering policy.
• However, the author still feels that VOST can still be a very useful energy tool to value solar energy. It is a viable alternative to compensating customers at the utility's avoided-cost rate, and it would expressly account for the environmental benefits of solar, whereas an avoided-cost rate will not necessarily do so.
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• Citation

Miller, Addison O. "A New 'Sunshine State'? Evaluating Minnesota's Value of Solar Tariff Methodology." ENVIRONMENTAL LAW 7, no. 2 (2016): 12.

Arizona regulators end retail net metering in value-of-solar proceeding[edit | edit source]

Arizona regulators end retail net metering in value-of-solar proceeding

• This article details a legislative action in Arizona which ended net metering.
• It will be replaced with a reduced rate of compensation for solar customers.
• This step would actually reduce the compensation offered to solar customers by about 30%, according to representatives from Vote Solar and The Alliance for Solar Choice.
• The solar advocates desired a compromise between net metering and VOS, but the judgment rendered that desire moot.
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• Citation

Utility Dive. "Updated: Arizona Regulators End Retail Net Metering in Value-of-Solar Proceeding." Accessed January 27, 2020. https://www.utilitydive.com/news/updated-arizona-regulators-end-retail-net-metering-in-value-of-solar-proce/432838/.

Is A Value Of Solar Tariff (VOST) Really Better Than Net Metering?[edit | edit source]

Is A Value Of Solar Tariff (VOST) Really Better Than Net Metering

• This article details the advantages of VOST but introduces a new perspective on evaluating tariffs - if it is good for the long term.

The author opines that VOS would be a short term move and hence net metering is the better alternative to ensure the continued growth of the solar industry.

A comparative assessment of net metering and feed in tariff schemes for residential PV systems[edit | edit source]

A comparative assessment of net metering and feed in tariff schemes for residential PV systems

• Citation

Poullikkas, Andreas. "A Comparative Assessment of Net Metering and Feed in Tariff Schemes for Residential PV Systems." Sustainable Energy Technologies and Assessments 3 (September 1, 2013): 1–8. https://doi.org/10.1016/j.seta.2013.04.001.

• Abstract

In this work, a comparative assessment of net metering vs. feed-in-tariff (FiT) supporting schemes for residential PV systems is carried out. A formulation for the computation of net metering supporting scheme parameters, in half hour intervals, is developed and typical household integrated with a rooftop PV system is investigated. The effect of the size of PV system with respect to the net metering supporting scheme is examined by varying the PV capacity and the effect of the electricity retail cost rate is investigated by varying the electricity retail cost rate. The comparative results indicate that net metering supporting scheme performs better than a FiT supporting scheme when the household electricity bill is taken into account. From the analysis it is clear that under certain conditions net metering supporting scheme becomes profitable.

Key Takeaways

Misconceptions of Net Metering:

1. Net Metering hurts utility production by decreasing revenues
2. When using Net Metering, a group of user pays for another group of user
3. Net metering is a burden for small utilities

Simulation of cost of rooftop PV system with different peak powers and different retailed electricity costs

Feed-in tariff (VOS / FIT) performs better than Net Metering

Net Metering only performs better that FIT in certain specific conditions

Valuation of Distributed Solar: A Qualitative View[edit | edit source]

Valuation of Distributed Solar: A Qualitative View

• Citation

Brown, Ashley, and Jillian Bunyan. "Valuation of Distributed Solar: A Qualitative View." The Electricity Journal 27, no. 10 (2014): 27–48. https://doi.org/10.1016/j.tej.2014.11.005.

• Abstract

A critical evaluation of the arguments used by solar DG advocates shows that those arguments may often overvalue solar DG. It is time to reassess the value of solar DG from production to dispatch and to calibrate our pricing policies to make certain that our efforts are equitable and carrying us in the right direction.

Key Takeaways

Criticize the Net Metering approach

Emphasis on the inclusion of all relevant ones externalities when calculating value of solar and not cherry-picking for particular interest (Section III of report)

When non-economic objectives are to be factored into value,then it is wise to carefully consider the most economically efficient ways of attaining those objectives.