Power market: - Retailer -> consumer front - Network -> grid - Wholesale - Generator USA: utility = retailer + network Distributed generation -> death of the utility Net metering tariffs - if you produce in excess of consumption: - sell electricity back to grid at retail price - higher price than wholesaler - dispalces the wholesaler Utility rate design: - Volumetric charges - kWh consumed, not kW at peak - decrease in volume of sales -> threatens cost recovery - efficiency increase - switch from nat. gas -> heat pumps - growth of distributed generation - rooftop solar PV - growth of dist. gen -> electricity rates must increase - those who don't have means to invest in dist. gen must pay higher price - utility taxes decrease Distributed gen still needs grid to import/export ### Problems 1) Volumetric charges - Volumetric charges do not represent customer's value of grid - customers with DG still have immediate access to grid, even if they don't need it at the moment - Volumetric charges don't link well to costs - variable cost - electricity generation/transmission - incremental capacity costs - peak demand - fixed costs Which is largest? -> Fixed costs 2) Net metering - compensating at retail rates - retail rate = wholesale cost + network fee + tax + levy + ... - allows DG owner to dodge network fees ### Solutions 1) "Straight-fixed Variable" rate - separates fixed and variable costs - charge fixed cost - fixed rate if you are customer - variable cost won't recover full cost of grid - charge variable cost - volumetric kWh charge - peak capacity charge - issues - potential cost shift from customers with above avg consumption to below avg consumption ## Utility of the Future - variable cost of distributing energy ($/kWh) - fixed cost of distributing energy at peak ($/kW) - residual charge to recoup remaining costs ### Net Metering - cross-subsidization of DG network users ### Recommendations