Berkeley Lab Findings on Net Metering and the Future of Distributed Solar

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Last week, the U.S. Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab) released a report examining the relationship between electricity rate structure and the future of distributed solar, entitled Net Metering and Market Feedback Loops: Exploring the Impact of Retail Rate Design on Distributed PV Deployment.

The report looks at two opposing feedback effects between solar installations and electricity rates.  The first, more widely-known, is the relationship between solar customers decreased reliance on the grid causing under-recovery of operating costs, which in tun causes electricity prices to rise. The rise in prices then leads to an increase in solar. The second, less well publicized relationship is that with time of use rates. When an increase in solar leads to a shift in the timing of peak pricing, solar adoption tends to decrease.

“Our study shows that—at least on a national basis—these two feedback effects largely counteract one another. As such, current discussions that focus largely on the fixed-cost recovery feedback miss an important and opposing feedback mechanism that can in many circumstances moderate the issue of concern,” notes Berkeley Lab’s Ryan Wiser, a co-author on the report.

The report, using a National Renewable Energy Laboratory model, also examines PV deployment levels under time-of-use rates, volumetric rates, feed-in tariffs, and avoided cost-based rates. The researchers found that most of these scenarios led to deployment levels that are lower than continuing under the current net metering and rate designs.

“We find that retail rate design can have a dramatic impact on PV deployment levels,” says report author Naïm Darghouth, a researcher in Berkeley Lab’s Energy Technologies Area. Applying this information to the net metering debates could lead to some breakthroughs in making the shift to renewables.