When solar and batteries work together, utility cost recovery can change

A rooftop solar panel and a battery share a circuit, but the economics of investing in both depend on the tariff around them.

What the study found

Engelman Lado and colleagues model a consumer who can invest in photovoltaic generation and energy storage under net energy metering and peak/off-peak tariffs. Their cost-minimization problem includes charging, discharging and investment decisions. They derive solutions across six regions of tariff space and use them to examine when solar and storage are complements or substitutes.

Under conditions specified in the abstract, when investment costs exceed the costs of serving the customer, the authors find no tariff in their analysis where investment in both technologies reduces bills for customers who do not adopt them. Under those same conditions, they report that complementarity reduces distribution-utility cost recovery for a given tariff.

Why it matters

The work connects private investment incentives with the utility's cost of serving participating customers. A Massachusetts-based case study examines the theory in a stochastic setting with multiple consumers and time periods.

Limits and unknowns

This is an arXiv preprint. The abstract alone does not provide the numerical assumptions, tariff boundaries or full case-study results. The stated cost-recovery result is conditional, not a claim that solar-plus-storage always raises other customers' bills.

Read the research

Authors: Nathan Engelman Lado, Ahmed Alahmed, Audun Botterud, Saurabh Amin

Published: 2026-10-29

Source basis: Based on the abstract only

Original abstract

We examine the joint PV and storage operational and investment decisions of a prosumer under net energy metering (NEM) and peak/off-peak tariffs. Legacy NEM compensates net exports at the retail rate over a netting period, typically under time-invariant pricing. To better reflect system costs, tariff features are being reconsidered, with many U.S. states adopting time-varying prices and export compensation below the retail price. We formulate the prosumer decision problem as a cost minimization problem with charge/discharge, PV investment, and storage investment decisions. We analytically derive the optimal decisions based on the tariff's membership in one of six regions that partition the tariff space. Using these solutions, we examine the relationship between PV and storage, identifying when they are complements or substitutes. Furthermore, we identify the relationship between private DER incentives and the distribution utility's (DU's) net cost of serving the prosumer. For both storage and PV, when investment costs are greater than the costs of serving the customer, there is no tariff where investment in PV and storage decrease non-adopter bills. Under the same conditions, complementarity between PV and storage decreases DU cost recovery for a given tariff. In a Massachusetts-based case study, we validate our theoretical findings by connecting tariff design features to DER interaction, the DU's net cost, and DER adoption in a stochastic, multi-prosumer, and multi-period setting.

This article is an AI-generated adaptation, not a substitute for the original research. Preprints may not have been peer reviewed; AI can make mistakes.