Financial Transactions Between the Electric Utility and the Solar Photovoltaic System Owner

Because of the expected increase in conventional technology fuel cost, reduction in the cost of some solar equipment, and other incentives, residential solar photovoltaic (RSPV) energy system as an onsite technology seems a promising technology of the future. Residential customers with surplus solar photovotaic (SPV) energy in excess of their load have the option of either selling that energy or storing it in batteries and consume it later. Their choice of the option depends on the financial transaction contract between such households and the electric utility. Buy-back ratio can be used to characterize the financial transactions between the utility and the SPV owner. This paper addresses the issue of buy-back ratio and its implications. It describes how buy-back ratio is going to affect the transaction between the SPV owner and the utility. Many components that affect the buy-back ratio are discussed from the electric utility perspective. A range of buy-back ratio is determined from the utility point of view.