The report states that modest and stable compensation leads to higher customer-sited solar PV rates than generous and unstable rates. The authors say, as the market takes off, subsidies must be removed to protect government budgets and cross-subsidizing between customers, and fair-value payments are more likely to support the next growth stage for rooftop solar.
In California, grid market regulators are considering an update to net energy metering policy that could result in a significant drop in credit to residential and commercial rooftop solar PV generators. Utilities in the market argue that non-solar PV customers are unfairly burdened with costs to support solar PV customers.
"Customer-sited solar and storage provide benefits not only to the customer but also to the system. As solar penetrations rise and markets mature, the regulator’s challenge is no longer to stimulate the market, but to move towards incentive structures that distribute the benefits ‘fairly,'" the authors wrote.
Policies that lower export rates to be below retail rates will incentivize customers to consume solar generation on-site and spur the growth of energy storage, the report finds. Both solar-only and solar+storage customers in California would be adversely impacted by a reduction in net metering, though residential rates are almost 3 percentage points higher when adding batteries into the scenario.
Time-of-use and time of production pricing signals, when properly designed, can also encourage the addition of storage to solar PV installations, according to the report.
The authors say utilities and regulators should remove penalties and simplify permitting processes to allow market growth.