The Profound Impact of Electricity Rate Design
By Robb Miller
| Reading time 1 minute
John Farrell at Renewable Energy World reported last month that Distributed Solar is nearing ‘Grid Parity’. His main point is that installed Solar Photovoltaics are very close to being cost competitive with grid power in numerous areas throughout the country.
John is basing this analysis on an average negotiated price of $5.00 per Watt for the solar modules and installation, and comparing that cost against various available tariffs in Los Angeles (fixed, Time-of-Use (TOU) & Tiered Pricing). (Of course the $ per Watt metric will vary across regions, landscape and system, and cost comparisons are inherently more complex).
His overarching point is, by leveraging both federal incentives and an available TOU plan, installed solar arrays are nearing a cost-competitive threshold for 40 million Americans in cities throughout the Nation. Conversely, he also concludes that “solar PV at $5 per Watt (with solely the federal tax credit) could not match average grid electricity prices in any of the sixteen to twenty largest metropolitan areas in the United States.”
In other words, electricity rate design has a profound affect on electricity consumer behaviour. We agree! We point to this illustrative example, a Lawrence Berkeley National Laboratory report from April 2010 analyzing the impact of rate design and net metering on bill savings for distributed PV in California. We’re also working on a deeper analysis of ‘solar friendly’ TOU electricity tariffs across North America.
The growing complexity and variance of energy pricing is one reason why we created a comprehensive electricity pricing database, and opened up our APIs. Please check to see if you have time of use plans available to you here. Also, please check your available incentives and rebates here.
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