Photovoltaic (PV) panels have long served as a cost-effective solution to provide power to remote cabins and homes built far from the power grid. To reduce the money spent on a home solar energy system, off grid system designers emphasize the importance of minimizing end use loads by using the most efficient lighting products and appliances available in the market, and foregoing certain unnecessary amenities.Today, the important link between solar use in the home and energy conservation and efficiency is being lost. While many well-intentioned system integrators preach the virtues of energy efficiency, grid connected solar by its very nature does not necessitate a rigorous assessment of the trade offs between a larger system and investments in energy efficiency. Furthermore, as is the case in California, rate structures and PV incentive program design can converge to make a given solar investment more financially attractive for those households with excessive consumption — so called energy hogs — relative to an energy efficient home. Tiered Rates and Solar Investments In the aftermath of the California electricity crisis, utilities were compelled by the Public Utilities Commission (CPUC) to institute tiered rate structures, which charge higher per kWh rates as consumption rises above a baseline. The baseline level of electricity consumption varies by season, region and type of service. Tiered rate structures serve as an effective mechanism to reward energy efficiency and conservation. The top tier rate for California utilities is set very high to strongly discourage consumption at those levels. For example, Pacific Gas & Electric’s (PG&E) standard residential rate E-1 has four tiers above the baseline, with the top tier rate of $0.37/kWh applying to all electricity usage over 300% of the baseline. The baseline for a single family home in the greater Sacramento area is approximately 16 kWh per day during the summer months. Assuming 30 days in a billing cycle, the baseline monthly consumption would be approximately 480 kWh. A household with monthly electricity usage equal to or less than the baseline would be charged at the lowest rate, in this case about $0.11/kWh. An energy intensive household using over 300% of the baseline would be charged a rate of $0.37/kWh for all consumption above 1,440 kWh during the summer months. The design of tiered rates serves to reward low consuming households and penalize high consuming households.
|PG&E Schedule E-1-Residential Service|
|Baseline Usage||$0.11430||480 kWh|
|101% – 130% of Baseline||$0.12989||481 kWh – 625 kWh|
|131% – 200% of Baseline||$0.22944||626 kWh – 960 kWh|
|201% – 300% of Baseline||$0.32146||961 kWh – 1,440 kWh|
|Over 300% of Baseline||$0.36969||>1,440 kWh|