Electricity: Status of Residential Deployment of Solar and Other Technologies and Potential Benefits and Challenges
Published: 2017-02-13T00:00:00

Fast Facts:
Rooftop solar panels, batteries, and smart thermostats, installed in residences, can allow customers to generate and store electricity, as well as manage its use. These and other technologies can make electricity grids operate more efficiently and provide other benefits—such as cleaner generation of electricity.
However, if deployed without regard to grid conditions, these technologies could present challenges—for example, too much customer-generated power could exceed local grid capacity and lead to higher infrastructure costs.
State and federal policymakers are considering ways to mitigate these challenges and maximize benefits.

Highlights:
section_title: Why GAO Did This Study
paragraphs: Traditionally, electricity has moved in one direction—from electricity suppliers to customers. Today, solar systems allow electricity to be generated at a customer's home and sent to the grid for electricity suppliers to use to meet other customers' electricity needs. Storage systems allow residential customers to store electricity from the grid or their own solar system for use at a later time. Furthermore, customers can use smart devices, such as thermostats, to manage their electricity consumption.
GAO was asked to provide information on the deployment and use of technologies that give customers the ability to generate, store, and manage electricity. This report describes (1) key federal and state policies used to encourage the deployment of these technologies, (2) the extent to which these technologies are being deployed, and (3) the benefits and challenges of deploying these technologies. GAO analyzed available data on technology deployment from EIA and reviewed relevant reports and regulatory documents. GAO interviewed a non-generalizable sample of 46 government agencies and stakeholder organizations. This sample included state regulators and at least one electricity supplier from each of five states: Arizona, California, Hawaii, Minnesota, and New York, which were selected based on state policies and having high levels of technology deployment.
GAO is not making recommendations in this report.
section_title: What GAO Found
paragraphs: Federal and state policymakers have used a range of policies to encourage the deployment of solar systems and other technologies that allow residential customers to generate, store, and manage their electricity consumption. For example, federal tax incentives—such as the investment tax credit—have reduced customers' up-front costs of installing solar systems. In addition, a Department of Energy funded database of renewable energy incentives identifies 41 states with net metering policies that require electricity suppliers to credit customers for electricity sent from their solar systems to the grid, providing an additional incentive. Moreover, in 14 states, customers can also receive state tax credits for installing solar systems, according to the database, which further reduces the up-front costs.
According to GAO's analysis of Energy Information Administration (EIA) data, deployment of solar systems has increased significantly in some states, with the total number of residential customers with solar systems increasing sevenfold from 2010 to 2015. However, customers with solar systems represent a very small portion of overall electricity customers—about 0.7 percent of U.S. residential customers in 2015, according to EIA data. Every state experienced growth in the number of customers with residential solar systems, although certain states, such as California and Hawaii, accounted for most of the growth and have had more widespread deployment. For example, about 14 percent of residences in Hawaii have installed a solar system, according to EIA data. Although comprehensive data on the deployment of electricity storage systems and smart devices are not available, the data and information provided by stakeholders GAO interviewed suggest their deployment is limited.
The increasing residential deployment of solar systems and other technologies poses potential benefits and challenges, and some policymakers have implemented or are considering measures to address these, as GAO found in its analysis of reports and stakeholder interviews. Specifically, these technologies can provide potential benefits through more efficient grid operation, for example, if customers use these technologies to reduce their consumption of electricity from the grid during periods of high demand. Nonetheless, grid operators GAO interviewed said they have begun to confront grid management and other challenges in some areas as solar deployment increases. For example, in some areas of Hawaii, solar systems have generated more electricity than the grid was built to handle, which resulted in the need for infrastructure upgrades in these areas. However, grid operators reported that challenges generally have been manageable because overall residential solar deployment has been low. Policymakers in some states have implemented or are considering measures to maximize potential benefits and mitigate potential challenges associated with the increasing deployment of these technologies. For example, two states' regulators have required electricity suppliers to identify areas of the grid where solar and other technologies would be most beneficial to grid operation. In addition, several state regulators recently have allowed electricity suppliers to adopt voluntary time-based electricity prices that increase when demand for electricity is high, providing customers with an incentive to reduce consumption at these times, potentially by using solar, storage, and other technologies.

section_title: Letter
paragraphs: The efficient and reliable operation of the United States’ electricity grid is  vital to the health of the nation’s economy and the well-being of  Americans. For more than 100 years, electricity suppliers—including  electric utilities—have provided residential customers with reliable access  to electricity by planning, building, and operating power plants and  transmission and distribution lines. Under this traditional model, the  electricity grid operates by moving electricity in one direction, with  electricity suppliers delivering electricity generated at large, centralized  power plants to customers’ homes and businesses. In exchange,  customers pay electric bills that include various costs associated with  maintaining the grid and providing electricity suppliers with a return on  their investments in grid infrastructure. As we previously reported, retail  electricity customers, including residential customers, typically have had  limited incentive or ability to adjust their consumption of electricity in  response to the changing costs of producing the electricity.
The traditional model for generating and selling electricity is changing. In  recent years, new technologies have become increasingly available to  residential customers that allow them to generate, store, and better  manage their consumption of electricity. For example, solar systems allow  residential customers to generate their own electricity, and battery  systems allow them to store electricity for later use. Additionally,  advanced meters—meters for measuring electricity consumption that  have communications and measurement capabilities that are more  advanced than those of older models—collect data on customer electricity  use that can help make customers more aware of their electricity  consumption habits.
We were asked to provide information on the deployment and use of  technologies that give residential customers the ability to generate, store,  and manage their consumption of electricity. This report describes (1) key  federal and state policies used to encourage the deployment of these  technologies, (2) the extent to which these technologies are being  deployed, and (3) the benefits and challenges of deploying these  technologies.
To address these three objectives, we identified and selected for review  reports published from 2013 to 2016 by academic stakeholders, the  Department of Energy’s (DOE) national laboratories, and industry groups  based on these reports’ relevance to residential deployment of new  technologies that enable customers to generate, store, and manage their  consumption of electricity, among other criteria. In addition, the team  reviewed other documentation, including state regulatory filings made by  electricity suppliers, key policy decisions by federal and state regulators,  and reports on specific topics relevant to our work. In addition, based on  data on technology deployment that we obtained from the Energy  Information Administration (EIA) and our review of related state  policymaking activity, we selected a non-generalizable sample of five  states that have been actively addressing issues related to these  technologies: Arizona, California, Hawaii, Minnesota, and New York. We  interviewed state regulators and at least one electricity supplier in each of  these five states. We also identified and selected federal agencies and  stakeholders to obtain national and regional perspectives. We selected  stakeholder organizations to interview based on their experience with the  deployment and use of relevant technologies and with policies related to  these technologies; we ensured the stakeholders we spoke to  represented a diversity of perspectives. In total, we interviewed  representatives from 46 federal agencies and stakeholder organizations,  including industry associations, third-party providers of electricity  technologies or services, consumer advocacy organizations, and  academic institutions, among others. Because this was a non- generalizable sample, the views of those we interviewed are not  generalizable to all potential government agencies and stakeholders. In  addition, we obtained and analyzed data from EIA’s survey of electricity  suppliers collected from 2007 to 2015, among other sources, to describe  the extent to which these technologies are being deployed. We took steps  to assess the reliability of all data used for this report, including reviewing  agency documentation on the data, interviewing knowledgeable agency  officials, and reviewing the data for errors and inconsistencies. We found  the data to be sufficiently reliable for the purposes of this report. See  appendix I for additional details about our scope and methodology and  appendix II for a list of agencies and stakeholders we interviewed.
We conducted this performance audit from September 2015 to February  2017 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: This section describes (1) the operation and regulation of the electricity  system and (2) advances in technologies available to customers that  allow them to generate, store, and manage their consumption of  electricity.
subsections: section_title: Operation and Regulation of the Electricity System
paragraphs: The electricity system involves four distinct functions: electricity  generation, electricity transmission, electricity distribution, and grid  operations. As shown in figure 1, electricity is generated at power plants,  from which it flows over high-voltage, long-distance transmission lines to  transformers that convert it to a lower voltage to be sent through a local  distribution system for use by residential and other customers. Because  electricity is not typically stored in large quantities, grid operators  constantly balance the generation and consumption of electricity to  maintain reliability. In addition, electricity suppliers sell electricity to  residential and other customers.
Continuously balancing the generation and consumption of electricity can  be challenging for grid operators because customers may use sharply  different amounts of electricity over the course of a day and throughout  the year. For example, in many areas, customer demand for electricity  rises throughout the day and reaches its highest point, or peak demand,  in late afternoon or early evening (see figure 2 for an example of how  demand changes throughout the day). As we noted in a prior report,  throughout the day, grid operators direct power plants to adjust their  output to match changes in demand for electricity. Grid operators  typically first use electricity produced by the power plants that are least  expensive to operate; operators then increase the use of electricity  generated by more expensive power plants, as needed to match  increases in electricity demand. As a result, providing electricity to meet  peak demand is generally more expensive than during other parts of the  day, because to do so, grid operators use power plants that are more  expensive to operate.
In general, grid operators perform planning to ensure that grid  infrastructure has sufficient capacity—the maximum capability in  megawatts to generate and transmit electricity—to meet future peak  demand, as we found in our review of reports from DOE and industry   sources. To accomplish this, grid operators typically develop forecasts of  future electricity demand based on historical information about customer  electricity use combined with assumptions about how customer demand  will change in the future based on population growth, economic  conditions, and other factors. In general, grid operators assess the  adequacy of existing grid infrastructure, identify any capacity needs, and  evaluate the cost and effectiveness of potential solutions to address these  needs. Potential solutions could include building a power plant to  generate additional electricity, building a new transmission line to  transport electricity to an area with estimated high future electricity  demand, or implementing a program to encourage customers in a high- demand area to use less electricity.
Responsibility for regulating the electricity industry is divided between the  states and the federal government. Most customers purchase electricity  through retail markets. State regulators, often called public utility  commissions, generally oversee these markets and the prices retail  customers pay for electricity (see sidebar). Before electricity is sold to  retail customers, it may be bought, sold, and traded in wholesale  electricity markets. The Federal Energy Regulatory Commission (FERC),  which oversees wholesale electricity markets, among other things, has  statutory responsibility for ensuring that wholesale electricity prices are  just and reasonable, and not unduly discriminatory or preferential.
section_title: Advances in Technologies Available to Customers
paragraphs: Technological innovation in recent years has led to the development and  increased availability of new and more advanced technologies that can be  deployed where customers live and that give customers greater control  over how they use electricity. These technologies can be deployed by  customers, electricity suppliers, or third-party providers—independent  entities that sell specific products and services to customers. Figure 3  illustrates the deployment of these technologies at a residence.
Distributed generation systems. Distributed generation systems are  relatively small-capacity electricity generation systems, such as those  installed at residences or other customer locations throughout the  grid, generally at or near the site where the electricity will be used. A  common type of distributed generation system is a solar system, such  as solar photovoltaic panels installed on a roof. Solar systems  installed at a customer’s location allow the customer to generate  electricity for their own use and send excess electricity to the grid that  electricity suppliers can use to meet other customers’ electricity  needs. Solar systems utilize inverters—devices installed with the  system to convert the electricity it generates into a form usable by the  customer and the grid.
Advanced meters and associated infrastructure. Advanced or  “smart” meters are deployed at residences and other customers’  locations by grid operators to allow them to collect data on customers’  electricity use at more frequent intervals than is possible with  traditional meters. Advanced meters are integrated with  communications networks to transmit meter data to grid operators.  This integration can reduce or eliminate the need for grid operator  personnel to read meters at a customer’s location. Data management  systems store, process, and receive data from advanced meters.  Certain advanced meters can be enabled to communicate directly  with customers’ smart devices by sending information, such as  electricity prices, that these devices use to take actions such as  reducing consumption.
Distributed storage systems. Distributed storage systems—such as  batteries located at homes—allow customers to store electricity from  the grid or from a distributed generation system for use at a later time.  For example, customers with distributed storage systems may store  electricity produced from an on-site solar system during the day when  their electricity consumption is lower than the amount of electricity the  solar system produces. Customers may then use this stored electricity  generated by the solar system later in the day, for example, during  peak demand periods.
Electricity management technologies. Smart devices—such as  smart thermostats, smart appliances, and electric vehicles with  automated charging controls—contain electronics capable of  automatically adjusting electricity consumption. Smart devices may  be controlled by energy management systems that allow customers to  automate control of their devices and respond to changing grid  conditions. For example, customers could choose to program their  electric vehicle to charge at night to avoid charging during peak  demand periods.
section_title: Federal and State Policymakers Have Used a Variety of Policies to Encourage Deployment of Solar Systems, Advanced Meters, and Other Residential Technologies
paragraphs: Federal and state policymakers have used a variety of policies to  encourage deployment of solar systems, advanced meters, and other  residential electricity storage and management technologies.  Specifically, policymakers have used (1) federal financial incentives and  state electricity policies to encourage residential deployment of solar  systems; (2) federal grants and state requirements to encourage  residential deployment of advanced meters; and (3) federal and state  financial incentives and state deployment targets to encourage residential  deployment of electricity storage and management technologies.
subsections: section_title: Federal Financial Incentives and State Electricity Policies Have Been Used to Encourage Residential Deployment of Solar Systems
paragraphs: Federal and state policymakers have used financial incentives and other  policies to encourage residential deployment of solar systems. Many of  these policies shorten the expected payback period of solar systems—the  period of time it takes customers to realize savings equal to the cost of  installation. These policies typically do so by reducing the up-front costs  of installation or by increasing the level of expected savings from the  system. At the federal level, the government has established tax  incentives encouraging residential deployment of solar systems. For  example, the Investment Tax Credit provides a tax credit, equal to 30  percent of the cost of installing a solar system, to the owner—either a  customer that owns the system or third-party provider that installs and  owns the system on behalf of a customer. This tax credit can generally  be claimed in full in the tax year during which the system is completed,  allowing the customer to immediately offset a large portion of the  installation costs. Data are not available on the amount of revenue  losses attributable to the use of the federal tax credits for residential solar  systems. However, the federal government is expected to forgo billions of  dollars in tax revenue as a result of individuals and corporations claiming  federal tax credits for installing solar systems and other renewable energy  technologies.
At the state level, policymakers have used several types of policies to  encourage residential deployment of solar systems.
Net metering policies. Net metering policies implemented by state  regulators generally require electricity suppliers to offer net metering  programs that credit customers for the electricity they send to the grid  from their solar or other distributed generation system. As of July  2016, 41 states had established policies that require electricity  suppliers to offer net metering programs to electricity customers,  according to the Database of State Incentives for Renewables and  Efficiency. Under net metering programs, electricity suppliers  generally subtract the amount of electricity customers send to the grid  from the amount of electricity they purchase from the grid to  determine the net amount of electricity for which customers are billed.  This reduces or in some cases eliminates customers’ payments for  electricity they obtain from the grid. Net metering programs can  provide more value for customers who pay high electricity prices  because these programs often credit customers for electricity they  send to the grid at the same retail price they pay to purchase  electricity from the grid. For example, a customer facing an electricity  price of 23 cents per kWh would receive a $23 bill credit for each 100  kWh increment of electricity sent to the grid, whereas a customer  facing a price of 10 cents per kWh would be credited $10 for sending  the same amount of electricity to the grid.
Policies allowing third-party-owned solar systems. Some states  have adopted policies that make it possible for third-party providers to  install solar systems, which the providers own and operate, on  residential customers’ private homes—thereby allowing solar systems  to be deployed on the homes of customers who could not otherwise  pay the up-front costs of installing the systems. Under these  arrangements, the third-party provider pays to install the solar system,  and the customer agrees to buy electricity generated by the solar  system or to make lease payments on the system to the third-party  provider. As of July 2016, at least 26 states authorized third-party  providers to enter into agreements to sell electricity in this way to  homeowners, according to the Database of State Incentives for  Renewables and Efficiency. Third-party providers may be able to  obtain federal tax incentives that are not available to individual  homeowners, in addition to claiming the federal Investment Tax  Credit. These tax benefits may be passed through, in part, to  residential customers in the form of lower prices for electricity  purchased from the solar system or more favorable system lease  terms.
Incentives. State financial incentives encourage the residential  deployment of solar systems by offsetting some of the up-front cost of  deploying the systems. For example, as of October 2016, 14 states  provided personal tax credits for installing solar systems, according to  the Database of State Incentives for Renewables and Efficiency. In  addition to tax incentives, states can provide grants, loans, or other  financial support to individuals who install solar systems. For example, the California Public Utilities Commission reported that from 2007 to  2016, the California Solar Initiative made available more than $2  billion for a program that funded rebates to residential and other  customers who installed solar systems.
Other policies. States have established several other types of  policies to encourage the deployment of residential solar systems, as  we found in our review of stakeholder reports and the Database of  State Incentives for Renewables and Efficiency. These policies are  described in table 1.
section_title: Federal Policymakers Have Used Grants to Encourage Residential Deployment of Advanced Meters, and Some States Have Required Deployment
paragraphs: Federal policymakers have used grants, and state policymakers have  used requirements and regulatory decisions, to encourage residential  deployment of advanced meters. At the federal level, DOE reported that it  provided more than $3.4 billion in grants through its Smart Grid  Investment Grant program from 2009 through 2015 for upgrades to the  electricity grid, including the deployment of advanced meters. In addition,  DOE provided about $600 million through its Smart Grid Demonstration  Program for demonstration projects that involved innovative applications  of existing and emerging grid technologies and concepts, which  supported some additional advanced meter deployments. At the state  level, policymakers in some states have enacted policies that require  regulated grid operators to deploy advanced meters at residences and  other customer locations or to file deployment plans with regulators,  according to an EIA analysis. For example, the California Public Utilities  Commission established a requirement that the three grid operators it  regulates install advanced meters at customers’ residences; the  commission also authorized the operators to recover associated  deployment costs through increased retail electricity prices. In addition,  DOE officials told us that regulators in some states have approved  proposals from the grid operators they regulate to install advanced meters  and recover the costs of installation from customers. However, some  state regulators do not have jurisdiction over all grid operators in their  state, such as those that are municipally owned; as a result, state  regulatory policies may not affect the deployment of advanced meters by  all grid operators in a state.
section_title: Federal and State Financial Incentives and State Deployment Targets Have Been Used to Encourage Residential Deployment of Electricity Storage and Management Technologies
paragraphs: Federal and state policymakers have used financial incentives, and state  policymakers have used deployment targets, to encourage residential  deployment of electricity storage and management technologies. The  federal government has provided incentives to promote these  technologies, though federal support for these technologies has been  more limited than federal support for advanced meters and solar systems.  For example, DOE funding through both the Smart Grid Investment Grant  program and Smart Grid Demonstration Program provided some support  for the installation of smart devices, including thermostats that can  receive price and other data from electricity suppliers. Furthermore,  customers who install residential storage systems potentially are eligible  for the Investment Tax Credit when they use the storage system to store  energy from their solar system; however, there is no federal tax incentive  for stand-alone storage systems. Additionally, customers who purchase a  qualifying electric vehicle potentially can receive a federal tax credit of  $2,500 plus an additional credit depending on the size of the vehicle’s  battery. Electric vehicles are primarily used for transportation, but  potentially can also be used as an electricity storage and management  technology.
At the state level, we identified examples of state policies that have  encouraged the deployment of electricity storage and management  technologies, based on interviews with stakeholders and our review of  state documentation. For example, in 2013, the California Public Utilities  Commission set targets for the electricity suppliers that it regulates to  procure about 1.3 gigawatts of storage capacity by 2020; this includes  procuring capacity from distributed storage systems installed by  residential and other customers. In 2012, California’s governor issued an  executive order focused on reducing greenhouse gas emissions that  established a target of having more than 1.5 million zero-emission  vehicles—including electric vehicles—on the road in the state by 2025. In  addition, the New York State Energy Research and Development  Authority partnered with an electricity supplier in the state to provide  residential and other customers with a financial incentive of $2.10 per  watt for distributed storage systems installed and operational before June  1, 2016 in order to reduce the electricity supplier’s peak demand.
section_title: The Deployment of Solar Systems and Advanced Meters Has Increased in Some States, but Other Technologies Have Not Been Widely Deployed
paragraphs: The deployment of solar systems and advanced meters has increased,  especially in some states, but other technologies have not been as widely  deployed. Specifically, our analysis of EIA data indicated that the  deployment of residential solar systems has increased significantly in  some states, but residential solar systems account for a small portion of  nationwide electricity generation. Additionally, our analysis of EIA data  indicated that advanced meters have been widely deployed among  residential customers in some states, and the use of advanced meters  has increased nationwide. However, available information suggests that  residential electricity storage and management technologies have not  been widely deployed.
subsections: section_title: The Deployment of Residential Solar Systems Has Increased Significantly in Some States, but Their Estimated Generation Remains a Small Portion of Nationwide Electricity Generation
paragraphs: Residential customers increasingly deployed solar systems from 2010  through 2015. Specifically, the total number of residential electricity  customers with solar systems increased sevenfold over this period,  according to EIA data. Despite this significant increase, our analysis of  EIA data found that only about 0.7 percent of all residential customers  nationwide had installed solar systems in 2015. In addition, residential  solar generation was low overall, accounting for approximately 0.1  percent of nationwide electricity generation, according to our analysis of  EIA estimates.
At the state level, every state experienced increases in the number of  residential customers with solar systems from 2010 through 2015, but  certain states accounted for most of the growth, according to EIA data.  For example, during this period, more residential customers in California  installed solar systems than customers in any other state. Furthermore,  California, together with nine other states, accounted for nearly all of the  increase in the number of customers with solar systems. The three  states with the highest proportion of residential customers with solar  systems in 2015 were Hawaii, with more than 14 percent; California, with  4 percent; and Arizona, with 3 percent. These three states had state or  local policies that encouraged the installation of solar systems. These  policies included net metering policies and policies that allow residential  customers to purchase power from third parties that install solar systems  on customers’ roofs, among others. Figure 4 shows data from EIA on the  number of customers who installed solar systems and the systems’ total  electricity generation capacity from 2010 through 2015.
In addition to identifying the aforementioned federal and state policies to  encourage the deployment of residential solar systems, we identified  through our review of reports and discussions with stakeholders that other  factors—such as increased efficiency, declining system costs, and high  electricity prices—also contributed to the deployment of residential solar  systems in some states. The efficiency of solar photovoltaic panels has  substantially increased across a broad range of manufacturers and panel  types over the past several decades, according to a National Renewable  Energy Laboratory analysis. As a result, similarly sized panels can  produce more electricity, improving the cost effectiveness of systems  because customers may need to purchase and install fewer panels to  achieve a desired amount of electricity generation. Additionally, recent  decreases in the costs of solar systems have made them more  economical for residential customers nationwide. DOE’s Lawrence  Berkeley National Laboratory reported that the national median price to  install a residential solar system has decreased since 1998, with the most  rapid declines occurring after 2009. (See fig. 5 below.) Based on these  data, a 6-kilowatt residential solar system that would have cost about  $51,000 in 2009 cost approximately $25,000 in 2015.
High electricity prices in some states also contributed to increasing solar  system deployment, according to several stakeholders we interviewed,  including electricity suppliers. Solar systems produce savings for  customers when the cost of the electricity that the systems generate is  lower than the cost of electricity that customers would otherwise have  purchased from the grid. Generally, the higher the retail price for grid  electricity, the more likely it is that a solar system will be cost effective for  customers, according to stakeholders we interviewed. For example, in  2015, Hawaii had the highest retail electricity price for residential  customers—29.6 cents per kWh, compared to the national average of  12.7 cents per kWh. Hawaii also had the highest proportion of customers  that deployed residential solar systems, with more than 14 percent of  residential customers having systems by the end of 2015.
section_title: Advanced Meters Have Been Widely Deployed in Some States
paragraphs: Grid operators widely deployed advanced meters among residential  customers in some states from 2007 through 2015, according to EIA  data. Nationwide, according to EIA data, the number of advanced  meters installed at residences grew 26-fold in recent years, from 2 million  meters in 2007 to 57 million meters (43 percent of all residential meters)  in 2015. However, as of 2015, levels of advanced meter deployment at  residences varied substantially by state, as shown in figure 6. Some  states that have experienced widespread deployment of advanced  meters—such as California, Maine, and Vermont—had established  policies requiring or encouraging grid operators to deploy meters. For  example, in California, about 99 percent of the residential meters installed  by the state’s three regulated grid operators were advanced meters, as of  2015, according to EIA data. Other states, such as New York and  Rhode Island, had virtually no advanced meter deployment.
In addition to the aforementioned federal and state policies to encourage  the deployment of advanced meters, stakeholders we interviewed told us  that the economic benefits of installing meters also contributed to their  deployment. For example, advanced meters allow electricity suppliers to  use fewer personnel and other resources for on-site meter reading. In one  case, representatives from a rural cooperative electricity supplier in  Arizona said that they began installing some form of advanced meters  about 15 years ago, largely because on-site meter readings for their  dispersed customer base were time consuming and costly. These  representatives said that all of their approximately 40,000 customers now  have advanced meters.
section_title: Available Information Suggests that Residential Electricity Storage and Management Technologies Have Not Been Widely Deployed
paragraphs: Residential electricity storage and management technologies have not  been widely deployed, according to electricity suppliers we interviewed  and available data from EIA; however, comprehensive data on their  deployment were not available. Residential deployment of distributed  storage systems, such as battery storage systems, has been limited,  according to representatives from several electricity suppliers we  interviewed, although comprehensive data on the deployment of these  systems were not available. For example, representatives from one  electricity supplier we interviewed said that as of May 2016, there were 72  customers with residential storage systems in their service territory of  more than 1 million customers. Similarly, residential deployment of other  technologies that can manage electricity consumption—such as smart  thermostats, smart appliances, and electric vehicles—is limited, according  to several electricity suppliers we interviewed. Comprehensive data are  not available on the extent to which residential customers have deployed  these electricity management technologies. However, available data from  EIA indicate that certain electricity management technologies are  becoming increasingly available. Specifically, the number of electric  vehicles available for sale has increased from almost none in 2010 to  more than 90,000 in 2014, according to EIA data. Several stakeholders  told us that several factors have kept the deployment of these  technologies low. These factors include high up-front costs for  technologies such as distributed storage systems, which can cost a few  thousand dollars per system. In addition, as discussed later in this report, customers may have limited opportunities to receive electricity bill savings  that offset these up-front costs.
section_title: Increasing Residential Technology Deployment Poses Potential Benefits and Challenges, and Some Policymakers Are Considering Measures to Maximize Benefits and Mitigate Challenges
paragraphs: Solar systems, advanced meters, and electricity storage and  management technologies could increase the efficiency of grid  operations, but the increasing deployment of residential solar systems  has begun to pose challenges for grid management in some areas.  Policymakers have implemented or are considering measures to  maximize the potential benefits and mitigate the potential challenges  associated with the increasing deployment of these technologies.
subsections: section_title: Solar Systems, Advanced Meters, and Other Technologies Could Increase the Efficiency of Grid Operations and Provide Other Benefits
paragraphs: Solar systems, advanced meters, and electricity storage and  management technologies have the potential to lead to more efficient grid  operations by enabling individual customers to generate, store, and  manage their consumption of electricity in response to conditions on the  grid, as we found in our analysis of reports and stakeholder interviews.  For example, the supply of electricity must constantly be balanced with  demand for electricity, and customers can use these technologies to  decrease individual consumption of electricity from the grid when demand  is high and increase consumption when demand is low. More efficient grid  operations can reduce the cost of producing electricity and reduce the  need for investments in additional generation, transmission, and  distribution infrastructure, according to several reports we reviewed.  Some of these cost savings can result in lower consumer prices. These  technologies can provide additional benefits, such as potentially reducing  greenhouse gas and other harmful emissions. Several grid operators we  interviewed identified various factors that could affect the extent to which  these benefits are realized, including where technologies are located,  how they are operated, and variations in conditions on the grid, among  others. Below we highlight several potential benefits associated with solar  systems, advanced meters, and other electricity storage and  management technologies identified in our review of reports and  interviews with stakeholders:
Solar systems. Several reports we reviewed and stakeholders we  interviewed identified examples of how residential solar systems can  help make grid operations more efficient. For example, in some  locations, electricity generated by solar systems can reduce peak  demand for electricity from the grid, which can lower electricity costs.  Additionally, because these systems generate electricity near the  point where it is consumed, they can potentially reduce how much  electricity grid operators have to transmit to customers, which can  help defer the need to upgrade distribution or transmission lines, thus  avoiding potential cost increases for customers. In addition, grid  operators and third-party providers told us that improvements in solar  system technologies, such as advanced inverters, may create  additional ways for solar systems to increase the efficiency of grid  operations. Advanced inverters have a variety of potentially useful  functions, including the ability to adjust a solar system’s electricity  output. Grid operators can use these functions to help balance  moment-to-moment changes in electricity demand. In addition,  according to several reports we reviewed, solar systems generate  electricity without producing greenhouse gas emissions or other  harmful pollutants, and electricity generated by these systems can  offset the need for electricity generated by power plants that emit  these pollutants.
Advanced meters. Advanced meters can improve the efficiency of  grid operations by providing grid operators with better information on  grid conditions and by enabling customers to manage their  generation, storage, and consumption of electricity in ways that align  with grid conditions, as we found in examples provided during  interviews with several stakeholders and in reports we reviewed.  According to DOE officials, advanced meters can provide more  detailed information about grid conditions by, for example, notifying  grid operators when individual customers have lost electricity service.  This information helps grid operators identify and remedy outages in a  more timely manner. In addition, advanced meter data collection and  communications capabilities, when enabled, can help customers  better manage their electricity consumption in ways that align with grid  conditions, such as by reducing electricity consumption during peak  demand periods. Specifically, advanced meters measure customer  electricity consumption data at shorter intervals than traditional  meters, and this more detailed information can help customers better  understand and adjust their electricity consumption patterns.  Additionally, certain advanced meters can communicate information  on grid conditions (e.g. periods of high demand) directly to smart  devices that can automatically modify their electricity consumption  (e.g. by reducing consumption during these periods of high demand).
Electricity storage and management technologies. Technologies  that enable customers to store electricity and manage their electricity  consumption could help improve the efficiency of grid operations,  among other benefits, according to reports we reviewed and  stakeholders we interviewed. In particular, customers could use  technologies, such as smart thermostats and possibly electric  vehicles, to modify their electricity consumption in response to the  overall demand for electricity from the grid. For example, a customer  could program a smart thermostat to reduce electricity consumption  when demand for electricity is high. Likewise, storage systems can  store electricity generated at times of low demand for use when  demand is high. These systems also can provide other benefits to  individual customers, such as giving customers a temporary source of  backup electricity in the event of an outage.
Using multiple residential technologies in combination increases the  potential to improve the efficiency of grid operations, according to stakeholders we interviewed and reports we reviewed. For example, while  a solar system could reduce demand during peak periods, several grid  operators we interviewed told us that peak demand in their service areas  occurs in the evening, when solar systems generate little or no electricity.  However, a solar system combined with a storage system could store  electricity generated during the day for use in the evening, when the  demand for electricity is high. In addition, smart devices provide  customers with the flexibility to shift their consumption to periods when a  solar system is producing electricity so they can make full use of the  electricity the system generates.
section_title: Increasing Deployment of Residential Solar Systems Has Begun To Pose Grid Management and Other Challenges In Some Areas
paragraphs: Several grid operators we interviewed told us they have begun to  experience grid management and other challenges in some areas as  deployment of residential solar systems increases, but they said these  challenges generally have been manageable because overall deployment  of these systems has been low. Several stakeholders we interviewed  identified various factors that could affect the extent to which these  challenges occur, including where solar systems are located, how they  are operated, and variations in conditions on the grid, among others.  Several stakeholders also identified similar challenges potentially posed  by other residential technologies, although these technologies have not  been widely deployed. The challenges we identified in our analysis of  reports we reviewed and in the views of stakeholders and federal officials  we interviewed include the following:
Limited information. Several grid operators we interviewed told us  that they typically only have information on customers’ net  consumption of electricity from the grid, and they generally do not  know (1) how much electricity is being generated by a customer’s  residential solar system or (2) how much total electricity is being  consumed at a customer’s location. According to these grid operators,  such information is important to effectively manage grid operations  and meet customers’ total electricity needs at all times. For instance,  during periods when a solar system is not producing electricity, such  as when clouds or snow prevent sunlight from reaching solar panels,  customers may be forced to shift from relying on their solar system to  relying on the grid to meet their total electricity needs. For areas with  high deployment of residential solar systems, this lack of information  can contribute to uncertainty about how best to prepare for and  respond to changes in electricity demand, which can, in turn, result in  higher costs for customers, as we found in our review of reports. For  example, grid operators may need to pay for a greater number of  flexible, fast-starting power plants to be on standby to account for  changes in demand. If operators had better information, they might  not need to have as many plants on standby. Having a greater  number of fast-starting plants on standby can raise operating costs,  which operators can pass on to all customers in the form of higher  electricity bills. Representatives from the transmission system  operator in California told us that they also lack information about the  electricity usage patterns of electricity storage and management  technologies, such as storage systems and customer smart devices.  This lack of information could further complicate grid operation and  planning if the technologies are added to the grid in increasing  numbers.
Limited control. Grid operators generally do not control where  residential solar systems are installed or how much electricity these  systems produce and when. The installation of solar systems is  generally based on customers’ preferences, while the amount of  electricity that solar systems generate is generally based on the  amount of usable sunlight available to the systems. In contrast, grid  operators generally control the level of electricity generated by power  plants and, in many regions, plan for the types of power plants that  are built and where they are located. According to several reports we  reviewed, the lack of grid operators’ control over solar systems’ output  can present challenges to these operators and result in additional  costs if solar systems’ locations and electricity output do not align with  grid conditions. For example, according to representatives from a grid  operator in Hawaii, high concentrations of residential solar systems in  some neighborhoods sent more electricity to the grid than the  distribution infrastructure in those neighborhoods was designed to  accommodate. These representatives said that this resulted in the  need to upgrade the distribution infrastructure to increase the amount  of electricity it could accommodate from solar systems; these  upgrades in turn resulted in additional costs for customers. In addition,  according to representatives from two grid operators we interviewed,  a lack of control over rooftop solar systems has, in some  circumstances, resulted in the operators reducing the amount of  electricity generated by large, renewable power plants under their  control, even though electricity from these larger renewable power  plants is less expensive to procure than the electricity that grid  operators purchase from residential solar systems. Furthermore, the  location and operation of other residential technologies—such as  storage systems and smart devices—are not controlled by grid  operators. Based on our review of several reports, these technologies  could mitigate or exacerbate operational challenges depending on  how well their use aligns with grid conditions.
Lower revenues for electricity suppliers. Under the traditional  business model, electricity suppliers earn revenue when they sell  electricity to customers. Customers who install solar systems use less  electricity from the grid, and this decline in usage can reduce  electricity supplier revenues, according to several reports we  reviewed. In addition, net metering policies under which electricity  suppliers credit customers for the electricity these customers send to  the grid can reduce electricity supplier revenues. Lower consumption  of electricity from the grid may produce some cost savings for  suppliers (e.g. reduced fuel consumption). However, several electricity  suppliers we interviewed told us that many of their costs—such as  costs associated with investments they previously made to build and  maintain power plants and transmission and distribution lines—are  fixed in the short term and will not decline even if solar customers use  less electricity from the grid. To the extent that reduced electricity  supplier revenues exceed any cost savings from customers’ use of  solar systems, suppliers may collect insufficient revenues to cover the  costs of operating and maintaining the grid, and they may earn a  lower financial return, as we found in our review of reports from DOE  national laboratories and other stakeholders. Our review of these  sources also found electricity storage and management technologies  could exacerbate challenges related to lower revenues, for example, if  storage systems facilitate further reductions in customers’ use of  electricity from the grid. According to several reports we reviewed  from multiple sources, the greater use of residential storage and  electricity management technologies—particularly storage systems— in combination with significantly expanded deployment of solar  systems, could lead to a cycle of reduced electricity consumption,  declining supplier revenues, and increasing electricity prices,  potentially creating long-term financial challenges for electricity  suppliers.
Cost shifts among customers. If electricity suppliers collect  revenues that are insufficient to cover the costs of operating and  maintaining the grid, as a result of lower electricity consumption from  customers who have solar systems, some of these costs could be  shifted to non-solar customers, according to several reports we  reviewed and stakeholders we interviewed. Several electricity  suppliers we interviewed expressed concern about cost shifts. Two  suppliers told us that while cost shifts had been negligible with low  levels of deployment, increasing deployment has made cost shifts  more significant. According to an electricity supplier in Arizona, as  reported in a 2013 filing to the state regulator, an average of $1,000 in  costs per net-metered solar system per year were shifted from  residential customers with net-metered solar systems to customers  without such systems. This resulted in a shift of an estimated $18  million in total annual costs. Another Arizona electricity supplier told  us that in its service territory, costs were often shifted from wealthier  customers, who could afford to install residential solar systems, to  lower-income customers, such as customers on tribal reservations.
Nevertheless, according to several reports we reviewed, solar  systems can provide benefits to the grid and society, as well as result  in financial savings for other customers. Recent estimates of the  specific costs and benefits of solar systems have varied widely,  according to a DOE national laboratory report we reviewed; these  variations have led to differing estimates of the potential cost shifts  some customers may face.
Increasing complexity of electricity industry oversight. The  increasing deployment of solar systems may increase the complexity  of overseeing the electricity industry, according to our analysis of  reports and the views of stakeholders we interviewed. For example,  increases in residential customers’ deployment of solar systems may  affect electricity transmission system operations. Residential solar  systems, when installed in large enough numbers within a geographic  area, can generate electricity that moves onto the transmission  system, according to two reports we reviewed. In areas with high solar  system deployment, grid reliability problems could cause a large  number of these systems to disconnect from the grid at the same  time. Such an occurrence could, in turn, cause a rapid drop in the  amount of electricity being sent to the grid from these systems and  make it challenging for transmission grid operators to maintain the  reliable operation of the grid. The installation of residential solar  systems is subject to state oversight, while the reliability of the  transmission system is subject to FERC oversight. This may  complicate oversight and operation of the transmission system as  additional solar and other residential technologies are added to the  grid. In addition, once solar systems are installed, FERC-regulated  transmission system operators generally do not have information and  control over the solar systems’ operation. Representatives from  DOE told us that electricity storage and management technologies  also increase the complexity of electricity industry oversight.
section_title: Policymakers Have Implemented or Are Considering Measures to Maximize the Benefits of Deploying Residential Technologies, While Mitigating the Challenges
paragraphs: Policymakers in some states and the federal government are considering  measures designed to maximize the potential benefits of advanced  meters, solar systems, and residential electricity storage and  management technologies, while mitigating the potential challenges,  based on our analysis of reports and the views of stakeholders we  interviewed. For example, based on our review, policymakers are  considering measures in several key areas:
Prices for electricity purchased from the grid. Policymakers in  several states have implemented or are considering measures to  change how customers pay for electricity in order to increase the  efficiency of grid operations and provide electricity suppliers with  sufficient revenues to maintain the grid. For example, time-based  prices—prices that vary throughout the day with demand—can be  used to encourage customers to manage their electricity consumption  in a way that aligns with conditions on the grid. Specifically, time- based prices are higher when demand for electricity is high and lower  when demand for electricity is low, which can encourage customers to  shift their electricity consumption from high to low demand times (see  sidebar on the following page). However, in 2004, we found that most  customers faced unchanging electricity prices, which limited their  incentive to respond to changing grid conditions. According to EIA  data, as of 2015, only five percent of residential electricity customers  nationwide paid time-based electricity prices. Several state regulators  recently have allowed electricity suppliers to adopt voluntary time- based prices, and regulators in other states are considering this  approach. In addition to time-based prices, policymakers in several  states have adopted policies that periodically and automatically adjust  customers’ electricity prices to ensure that electricity suppliers earn  sufficient revenue to cover the costs of operating and maintaining the  grid and   that they earn a rate of return allowed by state regulators. These  policies can make electricity suppliers less dependent on selling a  specific amount of electricity, because the suppliers earn the same  amount of revenue regardless of how much electricity they sell.  However, according to two electricity suppliers and a state regulator  we interviewed, while such policies help ensure electricity suppliers  receive sufficient revenue even as solar systems reduce the amount  of electricity that customers purchase, they do not necessarily  address concerns about cost shifts among customers.
Retail electricity prices historically have been  designed to reflect the average cost of  serving customers (see dotted line above) for  an extended period, up to a year or more, as  we found in past GAO work and stakeholder  reports. However, as we previously reported,  prices also can be designed to vary with the  cost of serving retail customers. These time- based prices can be designed in different  ways to align with grid conditions, such as in  the time-of-use pricing plan illustrated above.  With time-based prices, customers can  achieve bill savings by shifting their electricity  use from high-cost times to low-cost times.  For example, a storage system could be used  to store electricity from the grid during times  when prices are lower and discharge the  stored electricity when prices are higher.  Similarly, smart appliances could be  programmed to operate during periods when  electricity costs are relatively low.
Compensation for electricity sent to the grid. In order to mitigate  challenges related to reduced electricity supplier revenues and cost  shifts among customers, among other challenges, policymakers in  several states have begun to implement or are considering measures  to change how customers are compensated for the electricity they  generate and send to the grid. In making this determination,  policymakers have considered the benefits that solar systems and  other technologies provide as well as any costs that result from the  installation of solar systems, among other factors. In October 2015, in  Hawaii—a state with high deployment of solar systems and high retail  electricity prices—the Hawaii Public Utility Commission closed the  state’s existing net metering program to new participants and  established options for new solar systems, including reducing the  price customers would be paid for the electricity they send to the  grid. The Commission stated that this would allow the state’s  electricity suppliers to procure electricity in a more cost-effective  manner and reduce electricity costs for all customers. Policymakers in  other states have made different decisions about whether and how to  modify compensation for electricity sent to the grid based on their  assessment of the benefits and costs of distributed solar systems in  their states. For example, in California, state regulators made  changes to the state’s net metering policy that will compensate new   solar customers for the electricity they send to the grid at a price that  varies throughout the day based on overall customer electricity  demand.
Grid planning. Policymakers in several states are beginning to  implement or are considering measures to incorporate solar and  electricity storage and management technologies into grid planning. In  particular, state regulators in California and New York have developed  policies requiring regulated electricity suppliers in their states to  analyze the grid and identify areas where customer deployment of  solar systems and electricity storage and management technologies  could provide the greatest benefit, given local grid conditions.  Locating combined solar and storage systems in areas where peak  demand is projected to exceed the grid’s capacity to transmit  electricity to customers generally would be more beneficial than  locating such a system in an area with ample grid capacity, as we  found in our review of reports. For the long term, regulators in New  York are considering how prices for electricity could be modified to  encourage customers to locate and operate technologies in a way that  is most beneficial for grid operation, given conditions throughout the  grid, according to state documents we reviewed. Furthermore,  according to one stakeholder report we reviewed, electricity prices  could be modified to vary by both time and location to provide  customers with an economic signal about variations in grid  conditions. In addition, some regional transmission operators are  beginning to incorporate into their grid planning processes estimates  of the future deployment of solar systems, in an effort to identify the  extent to which these systems will reduce future demand for electricity  from the grid.
Technology and data solutions. Policymakers at the state and  federal levels are considering measures to mitigate challenges  associated with grid operators’ limited information about and lack of  control over solar systems as well as to facilitate the greater use of  data from advanced meters. For example, efforts are ongoing to  develop industry standards to facilitate the development and use of  advanced inverters that could provide grid operators with more  information about solar systems’ electricity generation as well as  provide them with some control over these systems’ electricity output.  Some states—such as California and Hawaii—have begun to develop  policies to use advanced inverters for future solar systems that are  connected to the grid. Additionally, in 2012, DOE helped launch the  Green Button initiative to encourage grid operators to provide  customers with electricity usage data from advanced meters in a  standardized format. Such standardized data formats allow third- party providers to more easily develop products—such as electricity  management software that can control smart devices—and help  customers manage their electricity consumption in ways that align  with conditions on the grid, according to our review of reports.
The role of the electricity supplier. Policymakers in some states are  considering whether the increasing use of solar systems and  electricity storage and management technologies necessitate policy  changes to ensure electricity suppliers remain financially viable and  able to support the reliable operation of the grid. Specifically, some  policymakers are considering changes to how electricity suppliers  operate and generate revenue, including developing new sources of  revenue. For example, according to a publication from the New York  State Energy Planning Board, the current business model for  electricity suppliers needs reform to ensure electricity suppliers can  accommodate and adapt to greater deployment of solar systems and  electricity storage and management technologies. As one  component of a broad strategy of energy reforms, the New York State  Department of Public Service has approved several demonstration  projects to identify, among other things, new revenue sources for  electricity suppliers. For example, one project involves an electricity  supplier in the state administering a website that provides customers  with electricity management information and access to third-party  providers that sell electricity management products and services.  Among other things, this project will evaluate various new sources of  revenue for electricity suppliers, such as earning a percentage of  revenues from sales of products and services made through this  website.
Regulatory coordination. Developing some measures to maximize  the benefits and mitigate the challenges associated with the  increasing deployment of advanced meters, solar systems, and  electricity storage and management technologies may require  coordination between federal and state regulators, as well as others,  based on our review of information in reports and the views of  stakeholders we interviewed. For example, as we noted in a 2004  report, the actions customers take in response to retail electricity  prices can affect the electricity markets under FERC jurisdiction. In  recommendations we made in 2004, we emphasized that FERC  should continue to coordinate with states and other industry  stakeholders to develop complementary policies related to electricity  prices. Furthermore, according to DOE officials, among other things,  it may be increasingly necessary to integrate electricity distribution  and transmission system planning processes and for grid operators  and regulators to collaborate to ensure that such technologies do not  adversely affect the reliable operation of the transmission system.  FERC officials we interviewed agreed that some opportunities exist for  FERC and the states to collaborate as technology deployment  increases, and they told us that FERC has some mechanisms to  achieve such collaboration. Specifically, FERC officials told us that  FERC collaborates with the states on issues of emerging interest in a  variety of formal and informal settings.
section_title: Agency Comments
paragraphs: We provided a draft copy of this report to DOE and FERC for review and  comment. DOE and FERC did not provide written comments or indicate  their agreement or disagreement with our findings but provided technical  comments, which we incorporated as appropriate.
As agreed upon with your offices, unless you publicly announce the  contents of this report earlier, we plan no further distribution until 30 days  from the report date. At that time, we will send copies to the appropriate  congressional committees, the Secretary of Energy, the Chairman of  FERC, and other interested parties. In addition, the report will be  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or ruscof@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report examines technologies available to residential customers to  generate, store, and manage their consumption of electricity. These  technologies include distributed generation systems (e.g. solar systems),  advanced meters, distributed storage systems, and electricity  management technologies (e.g. electric vehicles and smart devices). Our  objectives were to describe (1) key federal and state policies used to  encourage the deployment of these technologies, (2) the extent to which  these technologies are being deployed, and (3) the benefits and  challenges of deploying these technologies.
To address all three of these objectives, we reviewed reports and other  documentation, as well as interviewed stakeholders. We identified  relevant reports by conducting database and web searches and through  suggestions from the stakeholders we interviewed. Specifically, we  searched sources including Proquest, Inspec, SciSearch, among others,  and the websites of national laboratories and organizations focused on  electricity industry research. We selected 20 reports for in-depth review  based on their relevance to the residential sector, a focus on  commercially available technologies included in our scope, and the  source of the report, including the perspective represented by that source.  We selected studies from academics and research institutions, such as  the Department of Energy’s (DOE) national laboratories, as well as  studies from industry and other stakeholder groups representing different  views. These reports were published from 2013 through 2016. The team  also reviewed other documentation, including state regulatory filings  made by electricity suppliers, key policy decisions by state and federal  regulators, and reports on specific topics relevant to our work.
In addition, we interviewed officials and representatives from 46  government agencies and stakeholder groups. In particular, we  interviewed federal officials from DOE, the National Renewable Energy  Laboratory, the Lawrence Berkeley National Laboratory, the Federal  Energy Regulatory Commission, the Department of the Treasury, and the  Internal Revenue Service. Furthermore, we selected stakeholders that  provided single-state, regional, and national perspectives based on their  experience with the deployment and use of relevant technologies and  with policies related to these technologies, and the extent to which the  group represented a diversity of perspectives. To select stakeholders  representing single-state perspectives, we used EIA data to identify  states that had high deployments of relevant technologies and reviewed  state policymaking activity related to these technologies. We selected a  non-generalizable sample of five states that have been actively  addressing issues related to these technologies: Arizona, California,  Hawaii, Minnesota, and New York. We interviewed state regulators and at  least one electricity supplier in each state, and, in some cases, additional  stakeholders such as state energy departments and consumer  advocates. We identified additional stakeholders representing multi-state  perspectives through our research, using our past work, and by  considering suggestions from other stakeholders. We selected these  additional stakeholders to represent different perspectives and  experiences and to maintain balance with respect to stakeholders’ roles in  the market. The stakeholders included industry associations, third-party  providers (e.g. solar installers and software vendors), consumer advocacy  organizations, academics, electricity suppliers, non-governmental  organizations, and regional transmission organizations. Because this was  a nonprobability sample of 46 government agencies and stakeholders,  views are not generalizable to all potential government agencies and  stakeholders. (For a list of stakeholders interviewed, see Appendix II).  Throughout the report, we use the indefinite quantifier “several” when  three or more stakeholder and literature sources combined supported a  particular idea or statement. Our review of policies to encourage  deployment focused on methods of direct policy support for the  deployment of these technologies, as opposed to research and  development activities. In addition, our review did not consider  cybersecurity issues or standards for technology interoperability.
To describe the deployment of technologies by residential customers to  generate, store, and manage their consumption of electricity, we obtained  and analyzed data from the Energy Information Administration’s (EIA)  survey of electricity suppliers collected on EIA’s Form 861. Specifically,  we merged data sets on advanced meters, net metering, demand  response, distributed generation, dynamic pricing, and retail sales from  2007 through 2015. We calculated yearly totals for key variables, including: number of advanced meters, number of customers receiving  daily access to electricity consumption data, number of residential  customers with distributed generation under net metering agreements,  and generating capacity of residential customers with distributed  generation under net metering agreements, among others. In addition, we  calculated percentages to determine the level of deployment, such as the  percentage of advanced meters out of all meters and the percentage of  residential customers with distributed generation, such as residential solar  systems, among others. We analyzed these figures at the national, state,  and electricity supplier levels for each year in which data were available.  We also obtained and analyzed other data, including: 1) EIA 886 survey  data on electric vehicles to determine trends of electric vehicles becoming  available in the marketplace each year, 2) EIA estimates of average  residential retail electricity prices by state, and 3) EIA estimates on  national solar generation by sector. Some technologies, such as battery  storage and smart devices, did not have readily available, comprehensive  data on deployment. We took several steps to assess the reliability of EIA  data. We reviewed relevant documentation, interviewed EIA  representatives, reviewed the data for outliers, and addressed outliers  through discussions with EIA representatives. In addition, we reviewed  available documentation on the Database of State Incentives for  Renewables and Efficiency and gathered additional information about the  data-gathering practices from knowledgeable representatives at the North  Carolina Clean Energy Technology Center, which maintains the  database. We determined the data were sufficiently reliable for the  purposes of this report.
We conducted this performance audit from September 2015 to February  2017 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Government Agencies and Stakeholders Interviewed
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Jon Ludwigson (Assistant  Director), Eric Charles, Paige Gilbreath, and Miles Ingram made key  contributions to this report. Important contributions were also made by  Antoinette Capaccio, John Delicath, Cindy Gilbert, Michael Kendix,  Gregory Marchand, MaryLynn Sergent, Maria Stattel, Sara Sullivan, and  Barbara Timmerman.