Estimating the net societal value of distributed household PV systems

• Estimation of energy and environmental social value for 61 residential PV systems.
• Societal value of PV depends on the assumed level of the social cost of carbon.
• Good performing systems offer net marginal societal benefits.
• PV policies should focus on ensuring high PV system performance.

This paper presents a methodology for estimating the net marginal societal value of distributed residential PV systems within the Australian National Electricity Market. It includes PV’s potential direct marginal energy value including avoided losses, and marginal environmental value with respect to regional air pollutants and greenhouse gas emissions. This methodology is then applied for the example of 61 domestic rooftop PV systems located in Sydney. Results highlight that residential PV systems would seem to offer net societal benefits under reasonable assumptions of their energy and environmental values including the social cost of carbon, and given social discount rates. Much depends, however, on the assumed level of the social cost of carbon (SCC) and the system performance including issues of orientation, maintenance and shading. While such evaluations of societal value are challenging, they have an important policy role in better aligning private incentives for and against residential PV deployment with the societal benefits that such deployment can bring.