I suspect that during some part of the peaking demand is during prime sunlight hours, at least it seems to be where I live. That's also when my PV system is producing lots of power. So isn't the "value" of my PV electricity during peaking periods in the $1450/MW neighborhood, or $1.45/kW? And at my net meter rate of $0.109/kW, isn't the utility saving a substantial amount by having my PV power available? ... which also means less cost into the rate base and lower rates for customers?
Yes, peak demand is usually during daylight hours, especially in the summer. Then again, in some areas, winter demand, and even overall peak demand, occurs either in early morning as homes and businesses have their heat turned up, or in the evening as people return home from work and do the same.
The closer the demand peak is to the mid-day, the better solar can offset it. This is an important consideration in how much solar fits the market well within a given market.
The $1450/MW is what they're paying for only a small fraction of their energy to make up for the higher than predicted demand that they did not purchase energy for ahead of time. It's only worth that much for a few hours at most, a few days a year, and only if they can order enough of it at the time it is needed. Because they can't alter the output of your solar PV, it's value is less even at the peak times, although it does have some value. The rest of the year, it's value is significantly less - presumably averaging somewhere in the general ballpark of $0.109/kWh.
And since I paid for the PV system, and the utility had $0 capital cost in having access to my excess electricity at $0 cost, isn't customer financed PV power a really good deal for the utility? And even a better deal for the customer because it also reduces utility capital investment as part of the rate base which customers otherwise pay for in utility cost recovery?
And one more step, having customer financed PV distributed over a wide area, isn't it likely that "average" PV electricity probably is quite reliable, and predictable based on meteorology, which then allows peaking generation to also be predictable, and less used, all at lower customer cost?
Yes, it saves the utility capital investment, and that is non-trivial is you do a net present value or similar analysis. In a normal business, this is better for the short term results, but not as ideal for longer term results for the business, but the utility market is a lot more complex, so I'm less sure how well that applies.
The base rate deals more with the cost of building and maintaining the distribution infrastructure than the generation infrastructure. If distributed PV reduces the peak demand, it allows the grid to be lower capacity, and slightly lower costs, but this isn't always the case. In Hawaii, many utilities are having to limit residential PV installs until they can make upgrades, despite the fact that the system cost is a slam dunk compared to their electricity costs there, because the lines can't handle the power coming into the system. Long term, Hawaii will be far better for massively increasing their solar capacity, but the cash isn't available to upgrade everything at once.
Solar capacity prediction is extremely coarse over month+ long periods. It's much better over ~1 week periods, and pretty good over the span of a day, but not without surprises. I'm sure this level of solar integration is a field that will advance quite a bit over the next 10-15 years.
