Interaction between DER adoption decisions, tariff design and power system cost recovery

Increasing concerns over global warming, unstable prices of
fossil fuels, pollution are only few of the reasons for the
growth of the renewable generation. Renewable generation is
supported at different levels, but lately distributed
generation at the customer level started increasing.
Unfortunately, distributed generation has its own
disadvantages, and the main drawback is a deficit in the
cost recovery and as the result, the cross-subsidization
among consumers. In this thesis, the methodology to
evaluate the effect of the tariff design on the cost
recovery of the system when solar PV is installed is
proposed. This methodology was used for the Spanish
residential and commercial customers. Three models,
Financial Model (Model I), DER-CAM (Model II) and Cost
Recovery Model (Model III) were utilized. Firstly, monthly
payable amounts for regulated activities for all tariff
designs are calculated in model I. Secondly, the tariffs
from the model I are utilized in the DER-CAM to find the
annual deficit created by a PV owner. Then, these results
are further used in the cost recovery model to analyze the
system cost recovery deficit. This study compares the
deficits created by various tariff designs under different
scenarios of self-generation.