Value of net-FiT PV policies for different electricity industry participants considering demand-side response

Abstract

Net-metering feed-in-tariffs (net-FiT) policies for residential photovoltaics (PV) have financial implications not only for PV customers but also for all other electricity industry participants. They may also incentivise households to adjust their daily load patterns to either minimise or maximise PV export depending on the FiT design and wider retail electricity arrangements. In this paper, we study the financial implications of both residential PV systems and such demand-side response (DSR) on the financial returns of PV for households, their retailers and their distribution network service providers (DNSPs). We use half-hourly PV generation and household consumption data for 61 houses in the Australian city of Sydney and consider two net-FiT designs offering tariffs either significantly higher or lower than retail electricity rates. We use a simple model of DSR that allows households to increase PV exports or self-consumption by moving load between daylight hours and the evening. We find that such DSR modestly improve household revenue but has potentially greater implications for retailers and DNSPs. DSR to increase exports reduces the adverse impacts of PV on retailer and DNSP revenues, while increased self-consumption worsens them. Conversely, increased exports might drive DNSP expenditures in constrained network areas while increased self-consumption might help reduce them. The study highlights the importance of designing PV policies with regard to their implications for retailers and DNSPs as well as PV households. Furthermore, the broader policy settings of retail electricity markets will become increasingly important as PV deployment grows, opportunities for DSR expand and current inadequacies in retail electricity markets become more marked. Copyright © 2014 John Wiley & Sons, Ltd.