Analysis on the proliferation of residential PVs and cross-subsidy effect between customers on network charge by electricity consumption level

Abstract

Recently, thanks to various support mechanisms, residential photovoltaics (PVs) for self-consumption proliferates at a rapid pace. The net-metering scheme, which is implemented as one of the prevailing support mechanisms for selfconsumption PVs, contributes to the proliferation of residential PV by enhancing the economic benefit of PV adopters, but has some disadvantages such as missing network revenue of electric power utilities and spread of cross-subsidies between the customers. This paper analyzes the cross-subsidy effect of residential PV proliferation between customer groups segmented based on PV adoption and electricity consumption level under the net-metering scheme in Korean electricity market. The results show that missing network revenue of electric power utilities increase by about 0.83% for every 1% increase of residential PV penetration, and customers in the lowest usage tier provide more cross-subsidies toward customer in the higher usage tiers as with higher proliferation of residential PVs. In addition, this paper suggests that the cross-subsidy effect between customers can be reduced by introducing a new network charge design that is more consistent with the cost-causality principle and with the targeted deployment policy for self-consumption PVs.