TITLE:
The Economics of Residential Solar Panel Installations for Customers on Tiered Rate Plans
AUTHORS:
Prashanth U. Nyer, John B. Broughton, Candace E. Ybarra
KEYWORDS:
Solar Panels, Net Metering, Sustainability, Discounted Cash Flow, Present Value, Tiered Rate, Time of Use, Avoided Electricity Cost, Savings, Energy
JOURNAL NAME:
Open Journal of Business and Management,
Vol.7 No.4,
October
22,
2019
ABSTRACT: This case study uses data from a Southern California Edison residential
customer on a grandfathered tiered rate plan to investigate 1) whether it was
economically beneficial for the customer to have installed solar panels, and 2)
what level of usage offset (the percentage of the customer’s annual electricity
consumption that is provided by the solar panels) would have resulted in the
maximum financial return for the customer. We find that solar panels are an
excellent investment for this customer, and that the ideal usage offset for
this customer (and others on the tiered rate plans) is 100%. That is, the
savings are maximized when the solar panels produce 100% of the customers’
annual electricity consumption.