How OpenSolar calculates utility bill savings

This article explains how OpenSolar calculates the utility bill savings on your proposals. This article will address:

1. Different charge types that make up a utility bill
2. How utility bill amounts are calculated 
3. How a customer's electricity usage impacts the bill calculations
4. Utility bill savings when a customer goes solar

Factors that impact the Utility Bill Savings

1. Current Tariff Rate - the tariff rate that applies before the customer goes solar
2. Proposed Tariff Rate - the tariff rate that applies after the customer goes solar. This may or may not be the same rate as the current tariff rate
3. Total Electricity Usage Before and After going Solar - note that you can adjust the percentage increase/decrease in total usage after going solar in Control > Design & Hardware > Setbacks & Design Settings using the field "Usage Adjustment after sale".
4. Electricity Usage Profile - i.e. when and how much a customer uses electricity across the day and across the entire year. This is important in determining factors that impact the utility bill savings such as:
   • The amount of solar self-consumption on the system,
   • The amount of usage per time-of-use period if the customer is on a time-of-use rate,
   • How much is the battery able to charge each day, and how the battery operates,
   • The maximum demand, which is important in demand charge calculations
5. Electricity Inflation Rates - this can be set in Control > Design & Hardware > Setbacks & Design Settings.
6. System Design Details - this includes but not limited to the capacity of the solar system, the orientation of the solar arrays, whether it has a battery or not, and shading impacts.
7. Module Degradation - this impacts how much solar generation can be produced year on year, with the production decreasing over time.
8. Project Location - this impacts the amount of irradiance received at project location, and hence limits the amount of generation. The location's average temperature also has a secondary impact on the temperature derating on the modules.

This video will take you through these fields and will provide some troubleshooting incase you're seeing something that is off in your project. 

The different types of tariff rate charges

There are 3 main charges in a utility bill:

Below is a graph that illustrates the differences between demand and usage charges. Demand charges is a charge based off the highest demand (kW) across a bill period (as indicated by the dotted line). Whereas usage charges look at the kWh of energy consumed (i.e. the area under the curve).

Although some commercial bills may have demand ratchets, which is when a customer gets charged for their historical maximum demand (or percentage of maximum demand). Demand ratchets are used to ensure customers keep their maximum demand more consistent throughout the year. 

Note: OpenSolar currently doesn't support Demand Ratchet calculations.

Types of charge rate pricing structures

In almost all cases, a charge rate will fall into one of the following types:

How excess solar sent to the grid is compensated

Different utilities will often have different methods in which excess solar sold back to the grid is compensated to the customer. This is driven by regulatory environments in which those utilities operate in, but can also be a way for the utilities to distinguish themselves from their competitors and to incentivize solar customers to join them. OpenSolar supports a wide range of methods that excess solar sold to the grid is compensated, with the 3 main methods listed in the table below:

To read up more on the other solar compensation mechanisms supported by OpenSolar, please refer to this article on Creating Custom Tariffs.

Structure of a tariff rate

A tariff rate will generally consist of the 3 main charges types discussed above, which includes:

1. Usage Charges - this can be a flat rate, tiered rate or time-of-use rate. There may be one or more usage charges and they will typically they will fall into the following categories:
   1. Energy Charges (Can also sometimes be known as Generation Charges),
   2. Transmission/Distribution or Network Charges,
   3. Environmental Charges.
2. Demand Charges (Less common for residential rates) - this can also be a flat rate, tiered rate or time-of-use rate.
3. Fixed Charges - most tariff rates will have some form of a fixed charge (i.e. $/day, $/month, …). The common names you will come across on fixed charges are:
   1. Customer Charge
   2. Supply Charge
   3. Basic Charge

There are other "Extra Field" settings that can impact the tariff bill calculations which you can read more about at the bottom of this article on Creating Custom Tariffs. 

Impact of a customer's energy usage profile on their utility bill

A customer's energy usage profile has a large impact on the outcome of a customer's electricity bill.  When and how much a customer uses electricity across the day and across the entire year will impact a customer utility bill because it affects the following factors used in bill calculations:

• The amount of usage per time-of-use period if the customer is on a time-of-use rate,
• The maximum demand, which is important in demand charge calculations
• The amount of energy exported to the grid, and the solar compensation received. In general, the more a system exports to the grid, the less self-consumption there is.

You can read more on how to configure the electricity usage for a project in this article here.

Tariff bill calculations

We take all the factors highlighted above to calculate a set of hourly interval profiles for the entire year:

1. Usage (kWh) - the amount of energy drawn from the grid,
2. Exports (kWh) - the amount of energy exported to the grid,
3. Demand (kW) - the demand profile, which is the same as the hourly usage profile unless the demand profile has been overridden by setting the Maximum Demand in the Energy Page,
4. Generation (kWh) - the generation profile

Once we have the hourly interval profiles, we then calculate the total units charged for each tariff charge per bill across the simulated years. For example:

• For a Time-of-Use (TOU) usage charge, we would first sum up the total kWh usage for each of the TOU periods. To calculate the total usage charge per bill, we can then simply multiply the usage charge ($/kWh) for each TOU charge by their respective total usage (kWh) in that billing period.
• For Demand charges, we would look at the demand profile across the entire billing period and find the maximum hourly demand (kW). To calculate the total demand charge per bill, we can then simply multiply the demand charge ($/kW) by the maximum demand (kW) in that billing period.
• For Fixed charges, we calculate the charge amount that applies to each billing period after performing any necessary conversions. For example, if we have a fixed charge $/quarter and the billing frequency is per month, then we convert the $/quarter amount to its equivalent amount per month. If the billing frequency is the same as the fixed charge frequency no conversion is done.

We would perform the calculations above for each of the tariff charges until all of them have a calculated value for each bill period, across an entire year. Any excess solar exported to the grid is compensated accordingly based on the solar compensation mechanism and export rates set (or netted against the total usage if Net Energy Metering (NEM) is used). This process is repeated for every year, taking into account of electricity inflation and PV module degradation until all simulated years are completed (i.e. by default: 25 years).

Calculating bill savings

We perform the tariff bill calculations for the proposed and current systems separately, which may apply :

1. A different tariff rate - in the case whereby the customer switches their tariff rate after the installation
2. Different total baseline usage amount - the customer may change their usage patterns after installing solar, which may result in more or less total annual usage. This can be set in Control > Design & Hardware > Setbacks & Design Settings using the field "Usage Adjustment after sale".

In most cases, the current system is a system without any solar or battery, and the proposed system includes either solar, battery, or both. However, if you are designing a battery retrofit system, or upgrading an existing system (i.e. adding more capacity), then the current system may already include solar, battery or both. 

Once we have calculated the utility bill for both the proposed and current system, then the bill savings can simply be calculated by taking the difference between the proposed and current.