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A review of the value of solar methodology with a case study of the U.S. VOS

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  • Hayibo, Koami Soulemane
  • Pearce, Joshua M.

Abstract

Distributed generation with solar photovoltaic (PV) technology is economically competitive if net metered in the U.S. Yet there is evidence that net metering is misrepresenting the true value of distributed solar generation so that the value of solar (VOS) is becoming the preferred method for evaluating economics of grid-tied PV. VOS calculations are challenging and there is widespread disagreement in the literature on the methods and data needed. To overcome these limitations, this study reviews past VOS studies to develop a generalized model that considers realistic future avoided costs and liabilities. The approach used here is bottom-up modeling where the final VOS for a utility system is calculated. The avoided costs considered are: plant O&M fixed and variable; fuel; generation capacity, reserve capacity, transmission capacity, distribution capacity, and environmental and health liability. The VOS represents the sum of these avoided costs. Each sub-component of the VOS has a sensitivity analysis run on the core variables and these sensitivities are applied for the total VOS. The results show that grid-tied utility customers are being grossly under-compensated in most of the U.S. as the value of solar eclipses the net metering rate as well as two-tiered rates. It can be concluded that substantial future work is needed for regulatory reform to ensure that grid-tied solar PV owners are not unjustly subsidizing U.S. electric utilities.

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  • Hayibo, Koami Soulemane & Pearce, Joshua M., 2021. "A review of the value of solar methodology with a case study of the U.S. VOS," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
    • Handle: RePEc:eee:rensus:v:137:y:2021:i:c:s1364032120308832
    DOI: 10.1016/j.rser.2020.110599
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    3. Chelsea Schelly & Don Lee & Elise Matz & Joshua M. Pearce, 2021. "Applying a Relationally and Socially Embedded Decision Framework to Solar Photovoltaic Adoption: A Conceptual Exploration," Sustainability, MDPI, vol. 13(2), pages 1-18, January.
    4. Mariusz Niekurzak & Wojciech Lewicki & Agnieszka Brelik, 2022. "The Challenges for Social and Economic Policy Related to the Energy Transformation - Analysis of Profitability and Minimizing the Risk of Deciding to Invest in a Home Micro-Installation," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 144-159.
    5. Hanson, Eric & Canfield, Casey & Fikru, Mahelet G. & Sumner, Jenny, 2023. "State-level trends in renewable energy procurement via solar installation versus green electricity," Renewable Energy, Elsevier, vol. 218(C).
    6. Mariusz Niekurzak & Jerzy Mikulik, 2023. "Business Models in Terms of the Strategy for Sustainable Management in Economic Entities Taking into Account Energy Transformation," Energies, MDPI, vol. 16(11), pages 1-17, May.

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