A Valuation-Based Framework for Considering Distributed Generation Photovoltaic Tariff Design

Distributed generation photovoltaic (DGPV) cost-benefit analyses (CBAs) can provide substantive insights into understanding the potential flows of value among stakeholders that grid-connected DGPV programs might induce. Tariff design has a significant impact on the level and accrual of such value – thus, a cost-benefit analysis is a robust starting point for stakeholder engagement and discussion on DGPV tariff design. To that end this paper outlines a holistic, high-level approach to the complex undertaking of DGPV tariff design, the crux of which is an iterative cost-benefit analysis process. We propose a multi-step progression that aims to promote transparent, focused, and informed dialogue on CBA study methodologies and assumptions. When studies are completed, the long-run marginal avoided cost of the DGPV program should be compared against the costs imposed on utilities and non-participating customers, recognizing that these can be defined differently depending on program objectives. The results of this comparison can then be weighed against other program objectives to formulate tariff options. Potential changes to tariff structures can be iteratively fed back into established analytical tools to inform further discussions.