Concentric was engaged by a client to evaluate the potential financial risks associated with on-site commercial and industrial (“C&I”) solar investments in designated U.S. markets. The client sought to understand the potential for changes in rate design and Net Energy Metering policies in specific states, and how these changes may impact investor returns associated with a solar power purchases agreement (“PPA”).
Our analyses considered current and future costs of service, the potential for changes in utility rate design, the regulatory climate of the state, estimates of solar penetration and patterns of energy consumption and solar generation. These factors were then used to create financial impact scenarios for the utility, for ratepayers without on-site solar and ratepayers with on-site solar PPAs. Our modeling replicated utility costs under specific C&I tariffs, calculating utility revenue shortfalls and cost-shifting between ratepayers. Policy scenarios to address utility revenue shortfalls and cost shifting where then modeled, to determine the financial impact on both solar and non-solar customers.
The result was a better understanding of the financial risks associated with on-site solar investments in specific markets, and subsequent adjustments to PPA structures and underwriting policies.