A review of the value of solar methodology with a case study of the U.S. VOS

Koami Soulemane Hayibo, Joshua M. Pearce*

*Corresponding author for this work

Research output: Contribution to journalReview ArticleScientificpeer-review

Abstract

Distributed generation with solar photovoltaic (PV) technology is economically competitive if net metered in the U.S. Yet there is evidence that net metering is misrepresenting the true value of distributed solar generation so that the value of solar (VOS) is becoming the preferred method for evaluating economics of grid-tied PV. VOS calculations are challenging and there is widespread disagreement in the literature on the methods and data needed. To overcome these limitations, this study reviews past VOS studies to develop a generalized model that considers realistic future avoided costs and liabilities. The approach used here is bottom-up modeling where the final VOS for a utility system is calculated. The avoided costs considered are: plant O&M fixed and variable; fuel; generation capacity, reserve capacity, transmission capacity, distribution capacity, and environmental and health liability. The VOS represents the sum of these avoided costs. Each sub-component of the VOS has a sensitivity analysis run on the core variables and these sensitivities are applied for the total VOS. The results show that grid-tied utility customers are being grossly under-compensated in most of the U.S. as the value of solar eclipses the net metering rate as well as two-tiered rates. It can be concluded that substantial future work is needed for regulatory reform to ensure that grid-tied solar PV owners are not unjustly subsidizing U.S. electric utilities.

Original languageEnglish
Article number110599
Number of pages13
JournalRenewable and Sustainable Energy Reviews
Volume137
DOIs
Publication statusPublished - Mar 2021
MoE publication typeA2 Review article in a scientific journal

Keywords

  • Distributed generation
  • Economics
  • Net metering
  • Photovoltaic
  • Utility policy
  • Value of solar

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