Designing PV Incentive Programs to Promote Performance: A Reviewof Current Practice in the U.S. Page: 2 of 56
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organizations around the country. The financial incentives provided through these programs, which are typically
funded by taxpayers or utility ratepayers, are often in the form of an up-front rebate paid to the customer, and
they supplement any utility bill savings the customer receives.1
With the increasing level of public funding has come greater concern about the performance of
customer-sited PV systems. Although much remains to be understood about the extent to which performance
problems occur and the specific nature of the problems, studies of some of the larger PV programs and markets
have begun to shed light on the issue. For example, an evaluation of the California Energy Commission (CEC)'s
Emerging Renewables Program (for systems smaller than 30 kW) found that 7% of systems, in a sample of 95,
had lower-than-expected power output due to shading or soiling [1]. About 3% of a larger sample of 140
systems were not operating at all or were operating well below expected output, due to failed equipment, faulty
installation workmanship, and/or a lack of basic maintenance. In a recent evaluation of the other statewide PV
incentive program in California, the Self-Generation Incentive Program (for systems larger than 30 kW), 9 of 52
projects sampled were found to have annual capacity factors less than 14.5%, although reasons for these low
capacity factors generally were not identified [2]. Studies of PV systems in Germany and Japan, the two largest
PV markets worldwide, have also revealed performance problems associated with issues such as shading,
equipment and installation defects, inverter failure, and deviations from module manufacturers' specifications [3]
and [4].
Although owners of PV systems have an inherent incentive to ensure that their systems perform well,
many homeowners and building operators lack the necessary information and expertise to carry out this task
effectively. Given this barrier, and the responsibility of PV incentive programs to ensure that public funds are
prudently spent, these programs should (and often do) play a critical role in promoting PV system performance.
1 In many U.S. utility jurisdictions, customers with grid-connected PV systems are charged for their electric
utility service under an arrangement referred to as "net metering", whereby the customer is charged only for its
net electricity consumption (i.e., gross electricity consumption minus PV-generated electricity). Thus, under net
metering, customers are credited for PV-generated electricity at their standard retail electricity rate. Utilities that
do not offer net metering may provide a credit at a different (typically lower) rate.
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Barbose, Galen; Wiser, Ryan & Bolinger, Mark. Designing PV Incentive Programs to Promote Performance: A Reviewof Current Practice in the U.S., article, October 6, 2006; Berkeley, California. (https://digital.library.unt.edu/ark:/67531/metadc894948/m1/2/: accessed April 25, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.