Comparing a Value of Solar (VOS) Tariff to Net Metering

Abstract

The expanding role of distributed generation in our energy mix raises significant questions regarding how to compensate customers with on-site resources for the electricity produced and the full suite of services provided to the grid. The most common method, net metering, is a source of considerable controversy due to cross-subsidization and equity concerns. In 2013, the State of Minnesota enacted a rate structure first pioneered by municipal utility Austin Energy called the Value of Solar (VOS) tariff, which seeks to quantify the true value provided to the grid by distributed solar resources. This report examines the application of Minnesota’s VOS tariff to the Southern California Edison service area. The VOS tariff was calculated using publicly available data and the result was then compared to the current net metering policy in order to assess the impact on various stakeholders. The VOS tariff was also critically analyzed to consider any potential shortcomings of this approach and how the policy might differ if adopted by other jurisdictions.