Impact of photovoltaic demand-side management system on summer peaking utility

The purpose of this analysis is to examine the demand-side management (DSM) financial value of a photovoltaic (PV) DSM power system to the commercial end-use customer of the electric utility. The study focused on one utility, Boston Edison Company (BECO), which is a daytime summer month peaking utility. The value of the PV-DSM system to the commercial customer of BECO works out to roughly 11.9 cents/kWh for total energy that the PV-DSM system produces during the year. The payback of a PV-DSM system is highly sensitive to both discount rate used by a firm to evaluate an investment and to the number of years that the firm expect their investment to pay itself back. With the requirement by typical firms to have payback on investment of 3 to 5 years (or less), the calculated required installed cost per watt for the PV-DSM system of 0.26 to 0.48/Watt does not appear achievable in the near term. This emphasizes the need for financial arrangements that incorporate time horizons that are longer and match the useful life of the equipment.