The Impact of Retail Rate Structures on the Economics of Commercial Photovoltaic Systems in California Page: 2 of 41
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Keywords: Photovoltaics, Retail rate design, Net metering
The solar power market is growing at a quickening pace, fueled by rapid technological
advancements, concerns about global climate change and energy security, and an array of
national and local initiatives aimed at improving the value proposition of photovoltaic (PV)
systems. The United States represents the world's third-largest market for PV installations,
behind Germany and Japan, and installations in California represent over 75% of the entire
U.S. market for grid-connected PV. Though solar policies in the U.S. take many forms,
they commonly include up-front capital cost rebates or ongoing production incentives,
supplemented by net metering requirements to ensure that customer-sited PV systems
offset the full retail rate of their customer-hosts (see, e.g., Bolinger and Wiser 2002;
Cooper et al. 2006).
Somewhat less recognized is the role of retail rate design, beyond net metering, on the
customer-economics of grid-connected, customer-sited PV. Over the life of a PV system,
utility bill savings represent a substantial portion of the overall economic value received by
the customer.1 At the same time, the design of retail electricity rates, particularly for
commercial and industrial customers, can vary quite substantially. Retail rates may contain
flat or time-varying energy ($/kWh) charges and, for commercial customers, often demand
($/kW) charges as well. Understanding how specific differences in rate design affect the
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Mills, Andrew; Wiser, Ryan; Barbose, Galen & Golove, William. The Impact of Retail Rate Structures on the Economics of Commercial Photovoltaic Systems in California, article, May 11, 2008; Berkeley, California. (digital.library.unt.edu/ark:/67531/metadc933780/m1/2/: accessed January 18, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.