compensation mechanisms for distributed pv types and trends · 9/7/2019 · distributed energy...
TRANSCRIPT
Compensation Mechanisms for Distributed PV – Types and Trends
Naim Richard Darghouth, Ph.D.
Lawrence Berkeley National LaboratoryStakeholders’ Workshop
Ranchi, Jharkand | September 18, 2019
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• A “Compensation Mechanism” is the instrument designed to reward the DG customer for any DG generation that is exported to the utility grid.
• It strongly influences the value proposition of DG to both the customer and the utility.
What are compensation mechanisms?
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Why do compensation mechanisms matter?
PV System Owners
• Strongly influence value proposition of DPV investment
• Impact PV adoption
Utilities
• Determines how much utility is paying for DPV exports
• Impacts revenues and operating costs
Ratepayers
• Can impact retail rates, depending on compensation and cross-subsidies (if any)
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What is happening behind the meter?
Source: Designing Distributed Generation Tariffs Well. http://www.raponline.org/wp-content/uploads/2016/05/rap-linvillshenotlazar-faircompensation-2013-nov-27.pdf
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#1: Net Metering
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Pros
• Simple
• No new rates
• Existing metering infrastructure is usually sufficient
Net metering: Pros and cons
Cons
• Reduces sales
• Potential changes to net revenues
• Can lead to changes in utility profits or rates
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#2: Net Billing
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Pros
• More precise approaches to export compensation level
• Can encourage self-consumption
Net Billing / Net FiT: Pros and cons
Cons
• Similar issues to net metering, though more easily controlled by setting export rate
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#3: Buy all, sell all
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Pros
• Simple
• No potential for fixed cost recovery or cross-subsidization issues
• No need for retail rate re-design or creation of specialized solar rate classes
• Sell rate for new customers can be changed as needed
Feed-in tariff: Pros and cons
Cons
• Difficult to determine what the appropriate sell rate should be
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Compensation Can Balance Costs and Benefits of DG for Consumers and the Utility
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?
DPV Customer Compensation Rate Accrued Benefits - Incurred Costs
Relatively simple to calculate/predict Relatively difficultto calculate/predict
Value to Utility
Value to Consumer
Reduced electricity billsAdditional power availability*
Avoided generation costsReduced line lossesDeferred investmentsRegulatory compliance
Program administrationDistribution network upgradesLost fixed cost recoveryLost power re-sale margin
System costMeter costInterconnection cost
+ +
––
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For net metering and net billing schemes, PV compensation is intrinsically linked to underlying retail rates…
… so it’s important to understand how retail rate designs are changing to understand the impacts on PV compensation
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A few notes on retail rate reforms globally
Satchwell 2018
Utilities are deploying advanced metering infrastructure (AMI)
Distributed energy resource (DER) cost declines and technological innovations
Concerns about utility fixed cost recovery and revenue sufficiency
Desire for fair and equitable compensation for DER electricity generation
Variable renewable energy (VRE) integration issues (e.g., over-generation and net load shape impacts)
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Recent retail rate design trends
Increased pursuit of residential time-varying pricing
• Default vs voluntary
Introduction of energy pricing and programs for midday load building
• Off-peak midday
• Reverse demand response pilot
Increased application of residential three-part rates
• All residential customers or DG-customers only
Reforms to DG compensation
• Net metering → Net billing or Buy-all/sell-all rates
Development of electric-vehicle specific rates
• Private/public charging – EV only
• Multi-unit dwelling charging – EV only
Satchwell 2018
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Compensation mechanisms vary worldwide
FIT: levels dependon system size
Net Metering FIT
Net billing+ certificates forsmall-scale technologies
Net Metering< 100 kW
Net Metering, Net billing buy all/sell all
* Rodrigues S., et.al (2016) Economic feasibilityanalysis of small scale PV systems in differentcountries. Solar Energy.; BNEF.
Historcially Net Metering, but in
transition (details varyby state)
Net billing
Net Metering
Net Metering
FIT: levelsdepend on size
FIT: levelsdepend on size
Net billing
Net billing