Rate design with distributed energy resources and electric vehicles: A Californian case study

The high penetration of distributed energy resources and electric vehicles is changing the way the electricity system is managed. In turn, the way utilities have been recovering their expenditures through tariffs needs reformulation. We investigate the impact of different retail tariff designs from a Californian scenario on private investment incentives and cost-shifting using solar PVs, stationary batteries, and electric vehicles. The private commercial facilities studied do not own the vehicles, and the vehicle owners are remunerated for energy services provided; this remuneration strongly depends on the connection hours of the vehicles and the type of tariff applied. EV net income varies annually from $57 to $218 per vehicle, reaching the highest values when stationary batteries are present and significant demand charges are applied. We found that an energy-based tariff incentivizes the adoption of solar PVs, bringing high private gains, but often with high cost-shifting. A shift toward coincident peak tariffs in the short term and capacity-based tariffs in the long run, if the cost of DERs continues to fall quickly, can alleviate cost-shifting caused by strong DER penetration. Finally, we derive policy implications from the results and earmark more sophisticated tariff designs for further investigation.

Automated summary

The study investigates the impact of different retail tariff designs on private investment incentives and cost-shifting in a Californian scenario, focusing on solar PVs, stationary batteries, and electric vehicles. It suggests that a shift towards coincident peak tariffs in the short term and capacity-based tariffs in the long run could alleviate cost-shifting caused by strong DER penetration.