Impacts of Retail Electricity Rate Feedback, Rate Design, and Photovoltaic Compensation Mechanisms on Distributed Solar Deployment in the United States
The potential under-recovery of utility fixed costs resulting from PV net metering has elicited concerns about increased retail rate levels, leading to a feedback cycle of ever-rising PV deployment and retail rates. However, another under-recognized feedback mechanism—one related to time-varying retail rates –exists that could partially or fully offset this effect. This presentation examines the impact of these feedbacks on future PV deployment. It also explores the impact of various retail rate designs and net-metering rules on PV deployment levels. Our results indicate that aggregate feedback effects at a national level could be modest, but that future adoption of distributed PV is highly sensitive to retail rate structures.