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Tax Revenue Protection Through Outage Risk Mitigation: The Value of Distributed PV to the Federal Government

Valuation, Analysis, BCA   
The existing electric system was not designed to withstand multiple terrorist acts. One solution is to protect the system. This, however, is likely to be prohibitively expensive and may not even be successful. . . . Distributed PV is one technology that could be used to make the system a less attractive target because distributed PV could withstand a simultaneous attack on both the electric and the natural gas systems.  A more secure electric grid will provide the federal government with revenue protection. This paper found that the economic value of PV to the federal government is highly dependent upon (a) which customers install the PV and (b) how much PV is installed. Supplying all of the grid power with distributed PV would prevent a tax revenue loss of $90 per kW for a 1 week power outage (and four subsequent weeks of GDP interruption). Supplying a small amount of power with PV (the 0.4 percent of the electrical energy that provides 20 percent of the GDP), however, would prevent a tax revenue loss of more than $6,000 per kW from a 1 week power outage. The federal government should consider establishing an incentive for customers installing distributed PV because of the revenue protection it provides the government. . . . It is likely that customers with the lowest energy intensity will be the ones that install the PV and thus the government will obtain the greatest amount of revenue protection.