A significant change to electricity pricing for large commercial customers in Â鶹´«Ã½ is being recommended by the (UHERO).
A study, released August 27, recommends implementing a real-time pricing (RTP) tariff system. This approach would charge customers based on the hourly marginal cost of electricity production, a model known as locational marginal pricing (LMP). UHERO researchers say that this system could better manage grid demands, promote energy efficiency and fairly distribute costs among consumers.
According to the report authors Michael J. Roberts and Ethan Hartley, the system aims to reflect the true cost of energy production, including environmental and transmission expenses. The proposed tariff would combine variable pricing with a fixed charge to help cover infrastructure costs.
The new tariff would also let large customers build off-site solar and receive credit for generation at the locational marginal price. Because such facilities would likely be very profitable, the net benefits would be shared between energy-producing customer, other customers and Hawaiian Electric.
The report suggests piloting the program with UH, before potentially expanding to other large commercial customers.
“As Oʻahu¡¯s electric grid transitions to clean energy, characterized by variable wind, solar, and storage resources, the marginal cost of electricity will become increasingly variable across time and location,” according to the report. “Consequently, the value of using LMP for customer billing and compensating distributed generation will increase significantly.”
The proposal draws inspiration from Georgia Power’s long standing RTP model, but includes modifications for Â鶹´«Ã½¡¯s unique energy landscape.
As Â鶹´«Ã½ pursues its goal of 100% renewable energy by 2045, UHERO believes this pricing strategy could play a crucial role in managing the state¡¯s evolving power grid and supporting the integration of variable wind and solar resources.
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UHERO is housed in UH ²Ñ¨¡²Ô´Ç²¹¡¯s .