The Impact of Rate Design and Net Metering on the Bill Savings from Distributed PV for Residential Customers in California

Though net metering has played an important role in jump-starting the PV market in the U.S., alternative compensation methods are under consideration in some jurisdictions. Moreover, one inherent feature of net metering is that the value of the utility bill savings it provides to customers with PV depends heavily on the structure of the underlying retail electricity rate, as well as on the characteristics of the customer and PV system. Consequently, the bill-savings value of net metering – and the impact of moving to alternative compensation mechanisms – can vary substantially from one customer to the next. For these reasons, it is important for policymakers and others that seek to support the development of distributed PV to understand both how the bill savings benefits of PV varies under net metering, and how the bill savings under net metering compares to savings associated with other possible compensation mechanisms.

To advance this understanding, we analyze the bill savings from PV for residential customers of California’s two largest electric utilities, PG&E and SCE.

Lawrence Berkeley National Laboratory
Naim Darghouth
Galen Barbose
Ryan Wiser
April, 2010