We are pleased to announce the release of a new report from Berkeley Lab describing current trends in retail rate design, and implications of those trends for distributed energy resources (DERs).
The study focuses specifically on these five trends:
- increased pursuit of residential time-based rates,
- development of rates and programs to promote midday load building,
- increased application of residential three-part rates (i.e., demand charges),
- development of new net-metering alternatives, and
- development of new electric vehicle-specific rates.
Based on a set of case studies, the report discusses key motivations, rate design variations, and implementation experience across each of these five trends. The report also discusses how each of these trends might impact the deployment of distributed solar and other DERs. As illustrated in the figure below, these implications can vary substantially depending on the type of DER and rate design, and can also vary even for any individual rate design and DER technology.
Three broad themes emerge from this analysis:
- DER deployment impacts depend critically on the specifics of the tariff structure (e.g., the timing of TOU peak periods or the type of demand charge adopted).
- Flexible DERs (e.g., storage and certain forms of demand response) generally benefit more under emerging rate design trends.
- Emerging rate designs generally encourage load building (during specific times of the day).
Regulators engaged in retail rate reform efforts may thus wish to consider how new rate designs may impact deployment trends among different types of DERs, weighing those impacts against the many other considerations and stakeholder perspectives that regulators must balance in establishing utility rate structures.
This work was funded by the U.S. Department of Energy Solar Energy Technologies Office, under the auspices of the Solar Energy Innovation Network.