The report analyzed whether real-time pricing in the form of Con Edison's Rider M tariff can improve the economics of solar electric photovoltaic (PV) installations and facilitate greater use of hourly pricing within the New York City area.

Solar Real-Time Pricing: Is Real-Time Electricity Pricing Beneficial to Solar PV in New York City? (3 MB, PDF)

This report was prepared in 2009 for the New York City Economic Development Corporation and written by Bright Power, Energywiz, and the Association for Energy Affordability.

Executive Summary

The goal of this study is to evaluate the validity of the following statement:

"the coincidence of high electric energy prices and peak solar electric photovoltaic (PV) output can improve the economics of PV installations, and can also facilitate the wider use of hourly pricing.”

The study is focused on Con Edison electric service territory in New York City. Key conclusions that emerge from this analysis are:

• There is an historical correlation between hourly electricity price and solar electricity generation in New York City
• Solar PV output is highest when hourly electricity prices are highest.  In other words, solar PV electricity is undervalued by traditional electricity pricing structures.
• Solar generated electricity is typically more valuable under Rider M, Con Edison’s hourly pricing tariff, than under a standard Con Edison tariff.   But the overall cost of electricity is higher under Con Edison’s hourly pricing tariff than under a standard Con Edison tariff, for four of six buildings evaluated in this study. Consequently, any efforts to improve solar economics through hourly pricing should be careful to avoid negatively impacting the overall cost of power for solar customers.
• A building’s load profile plays a significant role in determining the value of solar PV output under available standard and hourly tariffs.  Solar PV’s ability to save on demand charges is less consistent than its ability to save on energy charges.  The cause is the building’s electric load, which is not perfectly tracked by PV output.  One way to mitigate this inconsistency is to compensate PV output purely on energy savings, with no demand component.
• Government incentives currently available in New York City have a much greater effect on the payback and cost-effectiveness of solar PV than changing from the standard rate to the available hourly rate. Despite the small increase in the value of PV under hourly pricing, up-front incentives remain the dominant factor in the economic analysis.

As a basis for the analysis, this report uses the following data:

• Hourly solar electric production for four solar PV systems within 70 miles of New York City, from 2007.
• Hourly electric consumption for six New York City buildings – two industrial buildings, two office buildings, two multifamily residential buildings – from 2007.
• Con Edison standard tariffs from 2007 (SC-04, SC-08, SC-09) Con Edison’s hourly pricing tariff, Rider M, from 2007 City, State and Federal incentives for installation of solar PV systems, available and current as of June 2009.