Elsevier

Energy Policy

Volume 146, November 2020, 111766
Energy Policy

Demand charge savings from solar PV and energy storage

https://doi.org/10.1016/j.enpol.2020.111766Get rights and content
Under a Creative Commons license
open access

Highlights

  • We examine the demand charge savings from PV for a variety of scenarios.

  • Demand charge savings are lowest under a non-coincident demand charge design.

  • Some demand charge design lead to greater demand charge savings from PV.

  • We discuss how well demand charge savings from PV align with utility system costs.

Abstract

With an increasing number of jurisdictions considering alternatives to net metering policies to financially compensate behind-the-meter solar photovoltaics (PV), customer economics will increasingly depend on its ability to reduce demand charges. Understanding these demand charge savings from PV—and how behind-the-meter storage can potentially enhance those savings—is essential to understand PV market dynamics and adoption in the coming years. This article explores how these demand charge savings vary with demand charge designs and customer load profiles, modeled for a variety of residential and commercial customers. Our findings indicate that demand charge savings are lowest under a basic, non-coincident demand charge design where the demand charge is based on the maximum demand level over the month, regardless of timing, resulting primarily from the temporal mismatch between the timing of the PV host's demand peak and PV generation. PV provides greater demand charge savings, for both commercial and residential customers, when demand charge designs are based on predefined, daytime peak periods or longer averaging intervals. Demand charge savings from PV combined with storage are almost always greater than the sum of the savings attained through either technology separately. We also explore how well demand charge savings from PV align with corresponding utility savings.

Keywords

Photovoltaics
Retail rate design
Demand charges

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