Efficient Adoption of Residential Energy Technologies Through Improved Electric Retail Rate Design PDF Download

Author: Noah Benjamin Rauschkolb
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

View

Book Description
This dissertation combines methods from engineering, operations research, and economics to analyze how emerging residential energy technologies can be effectively used to reduce both energy costs and carbon emissions. Our most important finding is that air-source heat pumps can be used to reduce both energy costs and carbon emissions in four out of the five major climate regions studied, but that electric retail rate reform is needed to provide customers with appropriate incentives. In cold climates, it may be advantageous to use heat pumps in tandem with fossil fuel-powered furnaces; in warmer regions, furnaces can be cost-effectively abandoned altogether. We do not find that distributed rooftop solar panels or distributed battery storage are effective tools for reducing the cost of energy services. Rather, in our simulations, customers adopt these technologies in response to poor price signaling by electric utilities. By reforming electric retail rates so that the prices paid by consumers better reflect the cost of energy services, utilities can promote the adoption of technologies that reduce both aggregate costs and carbon emissions.

Author: National Research Council
Publisher: National Academies Press
ISBN: 0309156866
Category : Science
Languages : en
Pages : 349

View

Book Description
America's economy and lifestyles have been shaped by the low prices and availability of energy. In the last decade, however, the prices of oil, natural gas, and coal have increased dramatically, leaving consumers and the industrial and service sectors looking for ways to reduce energy use. To achieve greater energy efficiency, we need technology, more informed consumers and producers, and investments in more energy-efficient industrial processes, businesses, residences, and transportation. As part of the America's Energy Future project, Real Prospects for Energy Efficiency in the United States examines the potential for reducing energy demand through improving efficiency by using existing technologies, technologies developed but not yet utilized widely, and prospective technologies. The book evaluates technologies based on their estimated times to initial commercial deployment, and provides an analysis of costs, barriers, and research needs. This quantitative characterization of technologies will guide policy makers toward planning the future of energy use in America. This book will also have much to offer to industry leaders, investors, environmentalists, and others looking for a practical diagnosis of energy efficiency possibilities.

Author: Scott P. Burger
Publisher:
ISBN:
Category :
Languages : en
Pages : 257

View

Book Description
Electricity tariffs typically charge residential users a volumetric (that is, per-unit of electricity consumed) price that recovers the bulk of the costs of generating, transmitting, and distributing electrical energy. These tariffs also often include taxes and recover other costs associated with regulatory or policy measures. The resulting prices do not reflect the true social marginal costs of generating, transmitting, and distributing energy, capturing little or none of the temporal and geographic variability of marginal electricity costs. These inefficient rates incentivize customers to over-consume power during periods of peak system stress and under-consume power during periods of relatively low demand; this dynamic drives up power system costs, costing Americans and Europeans tens of billions of dollars annually. Critically, it leads to investments in long-lived and low-utilization infrastructure needed to meet peak demands. Economists have long argued for reforming rates, but progress has historically been slow. Today, less than one quarter of one percent of residential electricity customers in the United States pay a tariff that reflects the real-time price of energy. The emergence of distributed energy resources -- such as solar photovoltaics and battery energy storage -- has sparked renewed interest among regulators and utilities in reforming electricity tariffs. Efficient rates hold the potential to improve the economic efficiency of distributed energy resource installation and operation decisions. However, the economic pressure to redesign electricity rates is countered by concerns of how more efficient rate structures might impact different socioeconomic groups. In particular, regulators have been dubious of efforts to reform how the costs of network infrastructure (that is, transmission and distribution networks) are recovered, rejecting more than 75% of such efforts in the U.S. in 2017. Focusing on developed power systems in contexts like the U.S. and Europe, this Thesis examines the distributional impacts of rate reform and proposes methods to improve the economic efficiency of rates without creating undesirable distributional impacts. This Thesis also explores the distributional impacts of rooftop solar photovoltaics adoption under alternative rate designs. This Thesis leverages data on electricity consumption measured half-hourly for more than 100,000 customers in the Chicago, Illinois area, paired with Census data to gain unprecedented insight into the impacts of reforming electricity pricing across customers of varying socioeconomic statuses. This Thesis then builds a simple model of the local utility’s -- Commonwealth Edison’s -- cost of service, and simulates solar PV adoption under alternative rate designs, measuring the impacts on customers of differing income levels. This Thesis demonstrates that low-income customers would face increases in expenditures on average in a transition to rates that recover residual network and policy costs through economically efficient fixed charges. However, this Thesis demonstrates that simple changes to fixed charge designs can mitigate these disparities while preserving all, or the vast majority, of the efficiency gains. These designs rely exclusively on observable information and could be replicated by utilities in many geographies across the U.S. Rooftop solar PV adoption under tariffs with inefficient, volumetric residual cost recovery are shown to create substantial distributional challenges: PV adoption under such tariffs increases expenditures substantially for non-adopters, which tend to be predominately lower income customers; efficient tariffs prevent this regressive cost shifting. In short, failing to reform rates may lead to worse distributional outcomes than reforming rates, even if reforms are implemented naively. Collectively, the findings in this Thesis underscore the need for regulatory reform around electricity pricing, and chart a path forward for balancing economic efficiency and distributional equity in public utility pricing.

Author: Brendon Baatz
Publisher:
ISBN:
Category : Electric utilities
Languages : en
Pages : 63

View

Book Description
"Residential electric rates are in a period of change as utilities in many regions of the country are experiencing flattening and declining sales. At the same time, technological advances are driving increased deployment of advanced metering, electric vehicles, and residential rooftop solar. All these changes are causing utilities to propose new rate designs for residential customers that depart substantially from previous offerings. Proposals for higher customer charges, demand charges, and time-varying rates are all on the rise. This report explores how these changes in residential electric rates may alter customer behavior and engagement in energy efficiency programs. We review recent studies on customer response to electric prices and analyze how various rate design proposals could alter payback periods for residential energy efficiency measures. We conclude with recommendations for regulators based on recent evidence of customer response to rate design"--Publisher's description (viewed March 22, 2017).

Author: National Academies of Sciences, Engineering, and Medicine
Publisher: National Academies Press
ISBN: 0309371422
Category : Science
Languages : en
Pages : 341

View

Book Description
Electricity, supplied reliably and affordably, is foundational to the U.S. economy and is utterly indispensable to modern society. However, emissions resulting from many forms of electricity generation create environmental risks that could have significant negative economic, security, and human health consequences. Large-scale installation of cleaner power generation has been generally hampered because greener technologies are more expensive than the technologies that currently produce most of our power. Rather than trade affordability and reliability for low emissions, is there a way to balance all three? The Power of Change: Innovation for Development and Deployment of Increasingly Clean Energy Technologies considers how to speed up innovations that would dramatically improve the performance and lower the cost of currently available technologies while also developing new advanced cleaner energy technologies. According to this report, there is an opportunity for the United States to continue to lead in the pursuit of increasingly clean, more efficient electricity through innovation in advanced technologies. The Power of Change: Innovation for Development and Deployment of Increasingly Clean Energy Technologies makes the case that America's advantagesâ€"world-class universities and national laboratories, a vibrant private sector, and innovative states, cities, and regions that are free to experiment with a variety of public policy approachesâ€"position the United States to create and lead a new clean energy revolution. This study focuses on five paths to accelerate the market adoption of increasing clean energy and efficiency technologies: (1) expanding the portfolio of cleaner energy technology options; (2) leveraging the advantages of energy efficiency; (3) facilitating the development of increasing clean technologies, including renewables, nuclear, and cleaner fossil; (4) improving the existing technologies, systems, and infrastructure; and (5) leveling the playing field for cleaner energy technologies. The Power of Change: Innovation for Development and Deployment of Increasingly Clean Energy Technologies is a call for leadership to transform the United States energy sector in order to both mitigate the risks of greenhouse gas and other pollutants and to spur future economic growth. This study's focus on science, technology, and economic policy makes it a valuable resource to guide support that produces innovation to meet energy challenges now and for the future.

Author: Frank A. Wolak
Publisher: Springer Nature
ISBN: 3030850056
Category : Business & Economics
Languages : en
Pages : 174

View

Book Description
This book covers the current trends and challenges faced by regulators, policymakers, and researchers in the field of retail electricity market design and regulation. It addresses the role that “smart” technologies are playing in reshaping how utilities and consumers interact with each other and with their generating technologies. The book covers topics including smart meter adoption, dynamic pricing, demand response, distributed and utility-scale solar, technology costs trends, and the microeconomic theory that governs our understanding of retailer and consumer incentives. Existing inefficiencies of transmission and distribution network pricing as well as the potential regulatory approaches that can be used to remedy them are discussed along with the advantages of retail competition and draw attention to the barriers that currently are preventing all of the benefits of retail competition from materializing. The book uses very recent data to provide the most up-to-date overview of retailing trends and policies in the USA, Europe, Asia, Oceania, and Latin America. The book will be useful for researchers and regulators and policymakers.

Author: Matthew Thomas Haley
Publisher:
ISBN:
Category :
Languages : en
Pages : 148

View

Book Description
The adoption of Distributed Energy Resources (DER) - such as battery energy storage and rooftop solar - are revolutionizing the topology and operation of the electric grid. When paired with smart control and communication technologies, DERs transform traditional electricity customers into providers of (potentially zero-emission) energy and grid services. Electricity rates - the policies that govern the retail use cases for these technologies - however, lag the technological advances of the modern grid. Retail rates designed in a less technically complex era - such as demand charges - do not send price signals that align customer behavior with either grid or social benefits. In this research we investigate the retail rate incentives for the commercial segment of energy customers in Texas. Texas provides an interesting test case for commercial investment in energy storage for two reasons: first, low energy prices driven by cost declines in renewables and natural gas has caused commercial and industrial energy use in Texas to grow compared to other states, second, retail restructuring in Texas has diversified the types of rates a commercial customer can choose from. In this analysis, we formulate a linear program to optimize commercial DER behavior over a variety of increasingly time-responsive commercial rate designs. We then utilize four years of historical data from ERCOT and 15 commercial building load profiles to investigate how each retail rate design aligns with system and social objectives including emission reductions. I find that time invariant rates - such as demand charges - often provide perverse incentives to some classes of commercial DER applications that increase system-wide costs and can increase emissions. In comparison I find that exposing commercial DER customers to dynamic prices that better reflects real-time system needs decreases overall costs and decreases emissions

Author: National Research Council
Publisher: National Academies Press
ISBN: 0309116023
Category : Science
Languages : en
Pages : 736

View

Book Description
For multi-user PDF licensing, please contact customer service. Energy touches our lives in countless ways and its costs are felt when we fill up at the gas pump, pay our home heating bills, and keep businesses both large and small running. There are long-term costs as well: to the environment, as natural resources are depleted and pollution contributes to global climate change, and to national security and independence, as many of the world's current energy sources are increasingly concentrated in geopolitically unstable regions. The country's challenge is to develop an energy portfolio that addresses these concerns while still providing sufficient, affordable energy reserves for the nation. The United States has enormous resources to put behind solutions to this energy challenge; the dilemma is to identify which solutions are the right ones. Before deciding which energy technologies to develop, and on what timeline, we need to understand them better. America's Energy Future analyzes the potential of a wide range of technologies for generation, distribution, and conservation of energy. This book considers technologies to increase energy efficiency, coal-fired power generation, nuclear power, renewable energy, oil and natural gas, and alternative transportation fuels. It offers a detailed assessment of the associated impacts and projected costs of implementing each technology and categorizes them into three time frames for implementation.

Author: Nelson S. Lee (S.M.)
Publisher:
ISBN:
Category :
Languages : en
Pages : 118

View

Book Description
Cost-reflective electricity tariffs hold the key to enabling a wider adoption of distributed energy resources. Standard residential electricity tariffs have a flat monthly charge and a static volumetric energy charge that do not provide the correct economic signals to customers and do not reflect the costs of maintaining and operating the grid. Besides subsidies or specific supports to certain technologies, there are currently limited economic incentives for customers to invest in numerous technology options, like home batteries and AC controls, that could collectively and in response to efficient price signals: reduce system peak load, reduce greenhouse gas emission, provide greater system reliability, and reduce system costs. This thesis qualitatively explores the cost drivers of the electricity system and their implications for residential tariff design, as well as the economic inefficiencies and cross subsides that are present under the current volumetric rate tariff. In addition, we quantitatively assess the impacts of different electricity tariffs on consumers and on distributed energy resource adoption. Based on hourly electricity meter data for 54,412 users in the Chicago area, the EIA 2016 residential energy survey, and the Commonwealth Edison's (ComEd's) costs of service reports, this thesis creates a full picture of residential energy consumption and costs. A regression-based Electric Load Decomposition (ELD) model was developed to predict hourly load profiles for each user's air-conditioning usage, electric heating usage and electric hot water heating usage. In addition, the MIT Demand Response and Distributed Resource Economics (DRE) model was used to evaluate the impacts of different electricity tariffs on customer bill changes, adoption of distributed energy resources, and reduction of CO2 emissions. In this work, we design twelve revenue-neutral tariffs which recover the same total amount of revenues as ComEd's default volumetric tariff. We then compare these tariffs to the current utility volumetric tariff for all 54,412 residential electricity accounts, and we assess the impacts of flat volumetric charges, Time of Use Pricing, Critical Peak Pricing, Coincident Peak Capacity Charges, Real Time Pricing, and Carbon Pricing on customer bills and other metrics of interest. In addition, we also model the adoption of several distributed energy resources in response to these different tariff scenarios in order to understand their economic viability. This work identifies the main tariff features that have meaningful impact on electricity bills, energy usage and CO2 emissions. Recovering network costs through a tariff that relies on a large capacity charge creates substantial bill changes compared to the default flat tariff. Alternatively, a tariff that has a combination of a flat volumetric rate and a real-time price creates minimal bill impacts. Additionally, we find that most of the tariffs tested in this work incentivize the adoption of smart thermostats for air conditioning and for electric hot water heater. However, in the case of electric space heating, none of the tariffs produced significant incentives to load shift by preheating the building, therefore smart thermostats for electric space heating were rarely adopted. The value created by residential batteries and solar panels are never enough to offset their high (unsubsidized) upfront costs. Furthermore, we find that tariffs that rely on large capacity charges to recover significant portions of network costs, also create favorable prices during the winter that allow electric heat pumps to have lower annual operational costs than natural gas furnaces. Finally, we find that although precooling or preheating of a building (to avoid high price periods) lowers the electricity costs associated to space conditioning, they also result in increased energy consumption and increased carbon dioxide emissions. On the other hand, the scheduling and operating of smart electric hot water heaters can reduce emissions.

Author: Richard L. Revesz
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

View

Book Description
Advancing energy technology, increasing penetration of distributed energy resources, and climate change concerns are forcing a transformation of the electricity grid. And, this transformation is making the economic inefficiency of the current rate designs increasingly more apparent. Today's typical rate designs not only fail to provide efficient price signals for electricity consumption, leading to inefficiently high capital expenditures and air pollution, but also fail to incentivize distributed energy resources, such as solar panels and energy storage, in a socially beneficial manner. As a result, reforming rates to accurately reflect the underlying costs, including external costs related to the emissions of greenhouse gases and other pollutants, is becoming an urgent endeavor.In this Article, we first explain how current electricity rate designs hamper economic efficiency because they break the link between price signals and underlying costs, especially the costs related to environmental externalities. Based on an economic framework, we highlight how better rate designs would improve economic efficiency, provide accurate price signals for distributed energy resources, and advance the seemingly conflicting interests of the relevant stakeholders. We provide a historical context to show that for almost 140 years of electricity rate design discussions, economic efficiency principles have mostly been ignored; yet, problems that stem from inefficient rate designs have continued to be salient. We then argue that the electricity sector is at a critical juncture, and that a shift to a paradigm with a long-term vision with better, economically efficient rate designs is necessary if we want to realize the clean energy future that the modern grid promises us.