Grid impact of non-residential distributed solar energy and reduced air emissions: Empirical evidence from individual-consumer-level smart meter data

Abstract

Most existing assessments of the energy saving and environmental benefits from distributed solar panels assume that the entire amount of electricity generated by distributed solar panels goes to replace the same amount of electricity needed from the electric grid. However, such an assumption can overestimate the actual environmental benefits because it incorrectly ignores the existence of rebound effects – increases in energy service usage. We provide the first empirical evidence of the grid impact of non-residential distributed solar energy and the associated reduced air emissions. Using consumer-level high frequency electricity consumption and solar panel installation data from Arizona, United States, we estimate the actual hourly reduction in electricity needed from the grid of commercial and industrial consumers through an econometric analysis. We show that this reduction is much smaller than the actual solar electricity generation. We also show that business distributed solar consumers create a further challenge to the utilities by not reducing their monthly maximum demand in July and August. Lastly, we calculate the benefit of reduced air emissions by multiplying the measured hourly reduction in electricity purchased from the grid by the marginal emission factors of CO2, SO2, NOx, and particulate matter. We estimate that the annual benefit of reduced air emissions from an average-size business distributed panel system is $1147.