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Uncovering the True Value of Solar: A Story of Ratemaking, Transmission Peak Pricing, and Misaligned Price Signals
Abstract

Ohio commercial and industrial energy users are increasingly considering on-site solar as a cost-effective method of hedging electrical energy costs and attaining corporate sustainability goals. Unfortunately, regulatory hurdles and poorly designed rate structures prevent customers from receiving the full value of their investment.


Solar generates several different value streams beyond simple reductions in grid energy purchases. For example, solar production often aligns with transmission system peaks and can be leveraged to passively reduce a facility’s peak load contribution. However, Ohio electric distribution utilities (EDUs) bill most of their customers using maximum monthly demand instead of their transmission specific billing determinant. This misalignment of system costs prevents the financial benefit of reducing transmission peaks from being passed back to the customer. Instead, the status quo ignores the time of use implications and implicit value of solar.


This presentation presents case studies in Ohio where valuing transmission peak savings was either instrumental in the decision to implement solar or flip an existing system from being a net cost to a net benefit. Additionally, we examine how the magnitude of savings can vary by transmission zone, both in terms of peak coincidence timing and by the cost of each transmission system. Finally, we make the case that in Ohio, it is a regulatory hurdle, rather than a technical hurdle, that prevents further adoption of solar, and we provide a framework for regulated EDUs, municipal electric companies, and rural electric cooperatives to expand access to solar.

Uncovering the True Value of Solar: A Story of Ratemaking, Transmission Peak Pricing, and Misaligned Price Signals

Schuessler, R. [Panel Presentation], ACEEE 2023 Summer Study on Energy Efficiency in Industry, 2023, July 11-13, Detroit, MI

Citation

Conference Presentation Slides

Uncovering the True Value of Solar - Presentation
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Ryan Schuessler, PE

Ryan Schuessler, PE

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