Net metering has become a widespread policy mechanism in the U.S. for supporting customer adoption of distributed photovoltaics (PV), allowing customers with PV systems to reduce their electric bills by offsetting their consumption with PV generation, independent of the timing of the generation relative to consumption. Although net metering is one of the principal drivers for the residential PV market in the U.S., the academic literature on this policy has been sparse and this dissertation contributes to this emerging body of literature.

This dissertation explores the linkages between the availability of net metering, wholesale electricity market conditions, retail rates, and the residential bill savings from behind-the-meter PV systems. First, I examine the value of the bill savings that customers receive under net metering and alternatives to net metering, and the associated role of retail rate design, based on current rates and a sample of approximately two hundred residential customers of California's two largest electric utilities. I find that the bill savings per kWh of PV electricity generated varies greatly, largely attributable to the increasing block structure of the California utilities' residential retail rates. I also find that net metering provides significantly greater bill savings than alternative compensation mechanisms based on avoided costs. However, retail electricity rates may shift as wholesale electricity market conditions change.

I then investigate a potential change in market conditions - increased solar PV penetrations - on wholesale prices in the short-term based on the merit-order effect. This demonstrates the potential price effects of changes in market conditions, but also points to a number of methodological shortcomings of this method, motivating my usage of a long-term capacity investment and economic dispatch model to examine wholesale price effects of various wholesale market scenarios in the subsequent analysis. By developing three types of retail rates (a flat rate, a time-of-use rate, and real-time pricing) from these wholesale price profiles, I examine bill savings from PV generation for the ten wholesale market scenarios under net metering and an alternative to net metering where hourly excess PV generation is compensated at the wholesale price. Most generally, I challenge the common assertion that PV compensation is likely to stay constant (or rise) due to constant (or rising) retail rates, and find that future electricity market scenarios can drive substantial changes in residential retail rates and that these changes, in concert with variations in retail rate structures and PV compensation mechanisms, interact to place substantial uncertainty on the future value of bill savings from residential PV.

Berkeley Lab’s annual Tracking the Sun report summarizes installed prices and other trends among grid-connected, distributed solar photovoltaic (PV) systems in the United States. The latest edition of the report focuses on systems installed through year-end 2018, with preliminary trends for the first half of 2019. The analysis is based on project-level data from approximately 1.6 million systems, representing 81% of all distributed PV systems installed in the United States through the end of 2018.

Key findings from this year’s report include the following:

• Distributed PV Systems Keep Getting Bigger, More Efficient. Median system sizes in 2018 grew to 6.4 kW for residential and roughly 50 kW for non-residential systems, though the spread in system sizes is also quite wide—especially for non-residential systems, with 20% larger than 200 kW. Increasing system sizes over time partly reflect a steady growth in module efficiencies, which rose a full percentage point to a median of 18.4% among systems installed in 2018. The report also details trends among other system design and project characteristics, including panel orientation, inverter loading ratios, solar-plus-storage, use of module-level power electronics, third-party ownership, and non-residential host customer segments.

• Installed Prices Continued to Fall through 2018 and into 2019. The report focuses its analysis of installed prices specifically on host-owned distributed PV systems. Among these systems national median installed prices fell year-over-year by 5-7%, depending on the specific distributed PV customer segment. Those declines are broadly in-line with trends over the past five years. National median installed prices in 2018 were $3.7/W for residential, $3.0/W for small non-residential, and $2.4/W for large non-residential systems. Considerably lower prices are observed among many systems, however.

• Installed Prices Vary Widely Across Projects. For example, among residential system installed in 2018, prices for host-owned systems ranged from $3.1/W to $4.5/W between the 20th and 80th percentile levels, and prices for small and large non-residential systems varied across similarly wide ranges. The report explores sources of that pricing variability, including differences in system size, module- and inverter-type, mounting-type, location, installer, host customer-type, and new construction vs. retrofits. This year’s report also contains a multi-variate regression analysis to isolate the effects of individual pricing drivers, including characteristics of the local PV market related to market size, competition, and installer experience, among other factors

 A public version of the underlying dataset is available for download at https://emp.lbl.gov/tracking-the-sun.