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Regulation & Public Policy folder

Grid-Connected Distributed Generation: Compensation Mechanism Basics

DG owners can be compensated in different ways for the electricity their systems generate. This short report defines compensation mechanisms for grid-connected, behind-the-meter DG systems as instruments that comprise three core elements: (1) metering & billing arrangements, (2) sell rate design, and (3) retail rate design. This report explores metering & billing arrangements (net energy metering (NEM); buy all, sell all; and net billing), with some limited discussion of sell rate design.

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Historical and Current U.S. Strategies for Boosting Distributed Generation

This report, written to inform energy planning in China, showcases regulatory support, policies, and financing innovations that have enabled DPV deployment and market growth in the U.S.

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Compensation for Distributed Solar: A Survey of Options to Preserve Stakeholder Value

New DG compensation mechanisms—such as value of solar and distributed locational marginal pricing—can offer additional value to generators while dampening the volatility of high DG penetration on the grid. Various pricing options, and policy options for protecting revenue adequacy for utilities are assessed in this report to provide readers with a variety of novel options to better compensate all stakeholders.

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Regulatory Considerations Associated with the Expanded Adoption of Distributed Solar

As adoption of DG increases, demand for utility provided power decreases. This report assesses the impacts this decreased demand is likely to have on utility recovery of fixed costs, rate structures, and emphasizes best practices for DG regulation.

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Distributed Solar Incentive Programs: Recent Experience and Best Practices for Design and Implementation

Incentive programs credit DPV generators for their production and, in several U.S. states, have been successful at creating demand for DPV to meet targets. This report examines various incentive structures and recommends best practices. Some incentive structures are found to be contextually more applicable than others, and tools to align incentives with changing market conditions are discussed. Because ratepayers are usually funding incentives, methods to protect ratepayers and ensure cost-effectiveness are also discussed. Utilities looking for ways to incentivize DPV to meet targets or obligations can find value in this report.

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Distributed Generation Regulation Library

The 21st Century Power Partnership supports global power sector transformation. The Partnership has developed a curated, annotated resource library that provides reports, academic literature, case studies, and good practices to support DG regulation in a variety of power system contexts. The library is organized around several topical areas: ratemaking, understanding impacts, interconnection, alternative business and regulatory models, planning, and case studies.

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Distributed Generation to Support Development-Focused Climate Action

DG can play a role in sustainable, low-emission, climate-resilient development worldwide. This report identifies the benefits of DG deployment in development scenarios through energy access, greenhouse gas emission mitigation, and climate resilience as well as specific actions that may enhance or increase the likelihood of climate and development benefits. Additionally, several brief case-studies of DG deployment in developing communities are included.

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Value of Solar: Program Design and Implementation Considerations

Value of solar is an emerging concept that provides a mechanism for utilities to compensate customers who generate their own electricity through DPV, based upon the cost-benefits to the power system. This report discusses program design options for Value of Solar tariff offerings and the impact of this type of tariff on future deployment of DPV. It also includes case studies from two jurisdictions in the United States (Austin, Texas and the state of Minnesota) that have adopted Value of Solar mechanisms.

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

Value of solar methods for compensating DG rely on cost-benefit analysis to determine tariff options. This brief report analyzes different objectives behind DGPV programs, finding that various objectives require different methodological perspectives when conducting a cost-benefit analysis and ultimately creating a tariff.

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Minnesota Value of Solar: Methodology

The U.S. state of Minnesota has enacted legislation allowing investor-owned utilities to use a value of solar tariff as an alternative to net metering for DPV. This document details the methodology participating utilities will use to calculate the value of solar tariff to account for several values of DPV (including energy and its delivery, generation and transmission capacity, transmission and distribution losses, and environmental value). The methodology includes detailed example calculations for each step.

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Methods for Analyzing the Benefits and Costs of Distributed Photovoltaic Generation to the U.S. Electric Utility System

Estimating the benefits and costs of DPV helps power system stakeholders evaluate appropriate regulatory measures and compensation programs for DPV. To inform these decisions, this report describes current and potential future methods, data, and tools to estimate the benefits and costs of DPV from the utility or electricity-generation system perspective. Although the report is explicitly written in the context of informing estimation of DPV costs and benefits to the United States electricity system, it provides insights relevant to power systems around the world.

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Understanding the Impact of Distributed Photovoltaic Adoption on Utility Revenues and Retail Tariffs in Thailand

Utilities worldwide are concerned about the financial impact of increasing DPV adoption among their retail customers. This report analyzes the impact of DPV deployment on distribution utility revenues and retail electricity tariffs in Thailand. It provides policymakers, utilities, and other energy practitioners a real-world example of how DPV affects certain stakeholders.

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Jamaica National Net-Billing Pilot Program Evaluation

Because of Jamaica’s high retail electricity prices, significant opportunity exists for DPV as an economic alternative. This paper reviews the effectiveness of Jamaica’s net billing pilot program, and identifies remaining challenges including a complex interconnection process, contractual ambiguity, and stakeholder equity concerns. The report provides several specific recommendations like shortening interconnection timelines, reducing caps on individual systems, and moving beyond a pilot phase. Many of these recommendations are applicable to other countries, particularly those with similarly high electricity rates.

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Designing Distributed Generation in Mexico

Recent market liberalization and energy sector reform in Mexico is pushing forward a wave of new potential for DG. This report explores how DG can fulfill many of Mexico’s energy goals. It presents specific policy options to better integrate DG as a cost-effective source of energy generation. Although specifically tailored to Mexico, many of the report’s recommendations can be applied in developing contexts.

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Informing Mexico’s Distributed Generation Policy with System Advisor Model (SAM) Analysis (English)

The Government of Mexico understands that distributed generation can contribute to meeting its greenhouse gas emissions reduction and clean energy targets. This report summarizes how analysis using NREL’s System Advisory Model (SAM) informed the government of Mexico’s distributed generation public policymaking process. Each case study within the report highlights important contextual background, the analysis process, results, and impacts.

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Informando la Política de Generación Distribuida de México con Análisis del Modelo para Asesoría de Sistemas (SAM)

El Gobierno de Mexico reconoce el potencial de la generacion distribuida limpia (GD) para contribuir significativamente a los objetivos de energia limpia y reduccion de emisiones de Mexico. Sin embargo, aun quedan preguntas importantes sobre como valorar justamente a GD y fomentar un crecimiento de mercado inclusivo y equitativo que sea beneficioso para los inversionistas, los contribuyentes de electricidad, los distribuidores de electricidad y la sociedad. El Laboratorio Nacional de Energia Renovable (NREL) de los EE. UU. se ha asociado con instituciones del sector energetico y partes interesadas en Mexico para proporcionar apoyo analitico oportuno y experiencia para ayudar a informar los procesos de formulacion de politicas sobre GD limpio.

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The Status and Outlook of Distributed Generation Public Policy in Mexico

Mexico is a regional leader in setting goals for reducing greenhouse gas emissions (GHG) and distributed generation (DG) development is a key priority for the country's policymakers. Current DG policies have fostered growth but need to be modernized to serve current needs and accommodate higher penetration levels. In this report, NREL summarizes international DG policy experiences and best practices and identifies the potential opportunities for policy reform.

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Mexico's Geothermal Market Assessment Report

This report supports U.S. companies in the geothermal sector in understanding potential business opportunities created by recent changes in the Mexican energy market and regulatory environment. The companies can also provide a variety of technology products and services for export into the Mexican market. This report elucidates key public and private sector stakeholders, the new regulatory and permitting environment and vehicles for financial assistance and risk mitigation.

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Designing Distributed Generation in Mexico

Mexico's energy reform will have far-reaching effects on how people produce and consume electricity in the country. Market liberalization will open the door to an increasing number of options for Mexican residential, commercial, and industrial consumers to deploy distributed generation (DG). Distributed generation is an option for consumers who want to produce their own electricity and provide electricity services to others. This report seeks to provide guidance to Mexican officials on designing economic and regulatory policies for DG.

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