Austin Energy – Value of Solar Rate

Note: In August 2014, the City Council of Austin, Texas, enacted Resolution No. 20140828, which directed program changes to the Value of Solar Tariff as follows:

• allow excess credits to be rolled over from year to year (instead of being reset at zero at the start of a calendar year),
• allow solar energy systems of any size to be eligible for the Residential Solar Tariff by removing the existing 20 kW cap,
• set an annual price floor equal to the residential electric rates of a “tier 3 customer” (i.e., $0.091 per kilowatt-hour for the rate schedule approved September 2013),
• allow leased system hosts to receive value of solar credits, and
• adopt a 5-year rolling average in calculating the annual assessment.

Origin

 In October 2012 Austin Energy, the municipal utility of Austin Texas, became the first utility in the U.S. to offer a Value of Solar Tariff (VOST) for residential customers with solar photovoltaic (PV) systems. The VOST is available for all past, present and future residential solar customers. The VOST replaces net metering for residential solar PV systems that are sized no larger than 20 kilowatts (kW). 

As of January 2018, the VOST is applicable to all customers with solar installations, both residential and commercial. The size limit is 10 MW, although different credit rates apply for customers with more than 1 MW of solar capacity.

Calculating VOST

 Under the VOST, a residential customer with an installed PV system is billed for all the electricity consumed in a billing period but is given a credit on the bill for each kilowatt-hour (kWh) of electricity the customer generates with the PV system. The amount of the credit assigned for each kWh of solar energy generated is calculated by using algorithms and web-based calculations developed Austin Energy and Clean Power Research. The VOST is administratively adjusted annually, beginning with each year’s January billing month. As of March 2023, the rate for systems under 1 MW-AC is $0.0991 per kWh, and the rate for systems of 1 MW-AC or greater is $0.0724 per kWh.

The VOST calculation is based upon several factors* including: line loss savings, avoided fuel costs, avoided costs of installing new generation capacity, fuel price hedge value, avoided transmission and distribution expenses, and environmental benefits. Taken together, these savings are intended to reflect the value of distributed solar energy to the utility—a “break-even” value for a specific kind of distributed generation resource, and a value at which the utility is economically neutral to whether it supplies such a unit of energy or obtains it from the customer.

Eligibility

 All systems must meet the requirements of Austin Energy’s interconnection guidelines and the customer is responsible for all interconnection costs. Interconnection agreements have a minimum term of 1 year unless the customer is a participant in the Austin Energy Solar PV Rebate Program, in which case the minimum term is 5 years. Agreements will be renewed automatically each year unless terminated by either party (requires 60-day written notice).

*Tariff calculations assume south-facing PV systems with 30-degree tilts.