Compensation for Distributed Solar: A Survey of Options to Preserve Stakeholder Value

Compensation mechanisms for electricity generation systems installed behind the meter are under scrutiny in several jurisdictions in the United States. Legislators in 29 states introduced bills to amend net metering provisions in 2014, and in 33 states in the 2015 legislative session as of August 20, 2015. Some utilities have also sought to increase the revenue they receive from net-metered customers through rate redesign. The circumstances that have triggered the recent push for change include a growing percentage of net-metered customers, potential effects of distributed generation on cost allocation, decreasing photovoltaic (PV) system costs, the challenges of integrating high levels of solar generation in the distribution network, and increasing pressure on utility business models. This report presents a survey of options to charge and compensate PV customers, as well as options that may preserve utility revenues in scenarios with increased DG. These options could be used as building blocks to create a distributed generation (DG) compensation policy that may preserve the value of the different stakeholders and balance their interests.