Electricity Bill Savings from Residential Photovoltaic Systems: Sensitivities to Changes in Future Electricity Market Conditions

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Customer-sited photovoltaic (PV) systems in the United States are often compensated at the customer’s underlying retail electricity rate through net metering. Calculations of the customer economics of PV, meanwhile, often assume that retail rate structures and PV compensation mechanisms will not change and that retail electricity prices will increase (or remain constant) over time, thereby also increasing (or keeping constant) the value of bill savings from PV. Given the multitude of potential changes to retail rates and PV compensation mechanisms in the future, however, understanding how such changes might impact the value of bill savings from PV is critical for policymakers, regulators, utilities, the solar industry, and potential PV owners, i.e., any stakeholder interested in understanding uncertainties in and potential changes to the long-term customer economics of PV.

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