Solar and Battery Residential Rate Plan Impacts

Utility rate plans have been become more complex, making it increasingly difficult to calculate the cost of electricity for residential users, masking the costs and benefits of residential solar and solar + batteries, and sending incorrect price signals to consumer. To our knowledge, the impacts of the costs of complex rate plans on the LCOE of solar and batteries for residential consumers has not been calculated and presented. This paper calculates the LCOE for combinations of solar and batteries, including no solar and/or batteries, examining the impact of effects such as Time of Use and Demand Charges. The key results are that more complex rate plans show little economic benefit for solar and battery users. These effects are due to two effects. The first is an increasing component of fixed charges (either solar-related or applicable to all users), such that reducing the electricity usage from the grid with lower-cost solar electricity does not substantially reduce overall LCOE of solar + battery. These fixed charges also substantially increase the LCOE for smaller electrical loads, in some cases nearly doubling it. For demand charges, eliminating every large peak in high electricity use months is not feasible, such that the charges from the utility are essentially constant. In addition to discouraging the use of solar, these plans also negatively impact the utility, as small batteries in solar + batteries have a beneficial impact on utility, enabling reductions in electricity use during early evening by more than 80%.