Researchers at the Michigan Technological University claim to have demonstrated that PV system owners in the United Stated are unjustly subsidizing electric utilities. Their analysis showed that, thanks to rooftop PV, utilities and their non-PV customers can save money from avoided costs for new grid, reserve, and generation capacity, as well as for avoided operation and maintenance and environmental and health liabilities due to fossil fuel power generation.
One of the most common arguments against supporting PV and other renewables through public incentives is that those power consumers that do not install a clean energy power generator are the most affected, as they have to bear the cost of the incentives without enjoying the benefits and financial advantages that the renewable energy systems can ensure. This argument has been used in the past, and often with success, by government, power utilities, and regulators to slow down or stop the advance of PV, especially among homeowners and small and medium-sized businesses.
A research group from Michigan Technological University has now sought to shed light on the true value of solar power generated by net-metered PV systems in the United States, and has found that non-PV consumers enjoy more benefits than commonly thought.
In the study A review of the value of solar methodology with a case study of the U.S. VOS, published in Renewable and Sustainable Energy Reviews, the scientists explained that their value estimations for grid-tied photovoltaic systems have proven that solar panels are beneficial not only for electric utilities but also for electricity consumers. “Anyone who puts up solar is being a great citizen for their neighbors and for their local utility,” research co-author Joshua Pearce said. “Customers with solar distributed generation are making it so utility companies don’t have to make as many infrastructure investments while, at the same time, solar shaves down peak demands when electricity is the most expensive.”
The academics explained that utility customers that own a rooftop solar array are under-compensated in most of the states as what they called the “value of solar” eclipses the net metering tariffs paid by the utilities. The U.S. group developed a model that takes into account realistic costs and liabilities utility companies can avoid with an increasing share of rooftop PV capacity.
The model considers the following variables: Avoided operation and maintenance costs; avoided fuel; avoided generation capacity; avoided reserve capacity; avoided grid capacity; and environmental and health liability costs due to fossil fuel power generation.
“It can be concluded that substantial future regulatory reform is needed to ensure that grid-tied solar PV owners are not unjustly subsidizing U.S. electric utilities,” Pearce affirmed. “This study provides greater clarity to decision makers so they see solar PV is truly an economic benefit in the best interest of all utility customers.”