Solar Energy (photovoltaics)

Technical Symposium

Exploring Demand Charge Savings from Residential and Commercial Solar

Thursday, September 27
11:05 AM - 11:20 AM
Location: 203AB

Abstract Content : Retail electricity tariffs with demand charges, whereby electricity customers are charged based on their peak demand, are commonly used for commercial customers and are increasingly being considered for residential customers as well. Recent discussions have focused in particular on the application of demand charges for residential customers with rooftop solar, as a potential means of better aligning customer bill savings from solar with the associated utility cost savings. These discussions, however, have been hampered by limited information about what level of demand charge savings customers might realistically expect to achieve from rooftop solar: a complex question, given variations in demand charge designs, customer loads, and PV generation profiles. Moreover, depending on the circumstances, demand charges from solar may or may not align well with associated utility cost savings.
To inform these ongoing deliberations, we have engaged in a series of studies to evaluate the potential role of demand charges in aligning customer bill savings and utility cost savings from rooftop solar. We seek to answer the basic question: To what extent, and under what conditions, can rooftop solar reduce demand charges?
The analysis addresses this question by estimating demand charge savings from solar across a broad range of demand charge designs, locations, and PV system characteristics. The analysis is based on 30-minute weather data spanning a 17-year historical period (1998-2014), sourced from the National Solar Radiation Database. Using those data, we simulate building loads for residential and commercial customer groups across 15 U.S. cities. Using the same weather data, we simulate rooftop PV generation for the same set of U.S. cities and across multiple PV system sizes and orientations. For each pair of load/PV data, we estimate monthly demand charge savings from solar, by comparing demand charges with and without solar, under numerous demand charge designs.
Under a basic, non-coincident demand charge design, residential and commercial customers generally achieve low reductions in demand charges from solar. However, demand charge savings may be significantly greater when based on pre-defined peak periods. For all demand charge designs, demand charge savings from solar can vary significantly by location and building type (for commercial customers), but orienting PV panels westward yields, at most, only slight increases demand charge savings.
For the residential sector, moving away from fully volumetric electricity rates to demand charges (with lower volumetric rates) will generally reduce bill savings from residential solar. Some demand charge designs are clearly better than others for customers with solar. Due to diminishing returns with larger PV systems, demand charges incentivize commercial customers to install smaller PV systems. Finally, demand charges may not always align well with utility cost savings from solar.


Naim R. Darghouth

Senior Scientific and Engineering Associate
Lawrence Berkeley National Laboratory

Dr. Naïm Darghouth is a Senior Scientific and Engineering Associate in the Electricity Markets and Policy Group at the Lawrence Berkeley National Laboratory. Naïm conducts research and analysis on renewable energy policy, both US and international, including electricity rate design and its impact on the value of residential renewable energy systems, economics of renewable energy technologies, and federal and state energy policies. Naïm has a PhD in Energy and Resources from UC Berkeley, and holds a bachelor's and master's degree in Electrical and Computer Engineering from Cornell University and Georgia Tech, respectively, and a master's degree in Energy and Resources from UC Berkeley.


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Exploring Demand Charge Savings from Residential and Commercial Solar

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