Designing Compensation for Distributed Solar Generation: Is Net Metering Ever Optimal?

Brown, David P.; Sappington, David E. M.

doi:10.5547/01956574.38.3.dbro

Cited by 66 publications

(48 citation statements)

References 25 publications

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“…While the empirical strategy chosen is the same as in regression (1), different subsamples are considered. In regression (7) and (8), we split our sample in two parts, before and after the major change in legislation supporting PV investments that took place in early 2014. First, focusing on the time period when the Solwatt system was in place, we observe no major change compared to our previous results.…”

Section: Resultsmentioning

confidence: 99%

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PV adoption: the role of distribution tariffs under net metering

Gautier

Jacqmin

2019

J Regul Econ

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The deployment of decentralized productions units (DPU) like rooftop solar panels is a major challenge for a transition towards greener energy sources. Under a net metering system where the meter runs backward when there is excessive PV production, the electricity produced by a solar panel is valued at the retail price. Higher retail prices thus encourage the deployment of DPU. To identify this relationship, we use data from Wallonia where tariffs are paid on a mostly volumetric base and where there are 13 different tariff zones. Using various specifications, our results suggest that in a municipality where the distribution tariff is one eurocent per kWh higher, the investment in solar PV is, all else equal, around 8% higher.

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Section: Resultsmentioning

confidence: 99%

“…2). 7 On average, as of 2017, distribution tariffs make 37% of the resident's final electricity bill (CWaPE, 2017). The regulated distribution tariff covers the cost of the grid cost but not only.…”

Section: Distribution Tariffmentioning

confidence: 99%

PV adoption: the role of distribution tariffs under net metering

Gautier

Jacqmin

2019

J Regul Econ

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“…Relevant literature regarding the modelling approach includes the work of Brown and Sappington (2017a, 2017b, 2018. In their papers, they apply a welfare analysis to gain insights into the issue of optimal retail tariffs in a setting where consumers with a certain elasticity are adopting distributed generation (DG).…”

Section: Literature and Reasoning Behind The Modelling Approachmentioning

confidence: 99%

“…Moreover, the benefits active consumers obtain could be at the expense of passive consumers. Brown and Sappington (2017a) estimate the welfare and distributional impact of a vertical utility not being allowed to recover its costs by raising fixed charges in addition to volumetric charges with net-metering. Indeed, they find that in a context with active consumers investing in solar PV, negative distributional and aggregate welfare effects can be more pronounced when the regulator is not allowed to raise fixed charges.…”

Section: Introductionmentioning

confidence: 99%

Least-cost Distribution Network Tariff Design in Theory and Practice

Schittekatte¹,

Meeus²

2020

The Energy Journal

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In this paper a game-theoretical model with self-interest pursuing consumers is introduced to assess how to design a least-cost distribution tariff under two constraints that regulators typically face. The first constraint is related to difficulties regarding the implementation of cost-reflective tariffs. In practice, socalled cost-reflective tariffs are only a proxy for the actual cost driver(s) in distribution grids. The second constraint has to do with fairness. There is a fear that active consumers investing in distributed energy resources (DER) might benefit at the expense of passive consumers. We find that both constraints have a significant impact on the least-cost network tariff design, and the results depend on the state of the grid. If most of the grid investments still have to be made, passive and active consumers can both benefit from cost-reflective tariffs, while this is not the case for passive consumers if the costs are mostly sunk.

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“…The interaction between distribution tariff structures and DER investment has been studied extensively. Many researchers focus on volumetric net-metering tariffs that incentivize investments in photovoltaics (PV) (Simshauser, 2016;Eid et al, 2014;Laws et al, 2017;Brown and Sappington, 2017). Simshauser (2016) finds that net-metering policies in Southeast Queensland in Australia have led to significant welfare transfers from non-solar to solar households, thus forming an "implicit subsidy" for PV.…”

Section: Introductionmentioning

confidence: 99%

Spillover effects of distribution grid tariffs in the internal electricity market: An argument for harmonization?

et al. 2019

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The Robert Schuman Centre for Advanced Studies, created in 1992 and currently directed by Professor Brigid Laffan, aims to develop inter-disciplinary and comparative research on the major issues facing the process of European integration, European societies and Europe's place in 21 st century global politics.The Centre is home to a large post-doctoral programme and hosts major research programmes, projects and data sets, in addition to a range of working groups and ad hoc initiatives. The research agenda is organised around a set of core themes and is continuously evolving, reflecting the changing agenda of European integration, the expanding membership of the European Union, developments in Europe's neighbourhood and the wider world.For more information: http://eui.eu/rscasThe EUI and the RSCAS are not responsible for the opinion expressed by the author(s). Florence School of RegulationThe Florence School of Regulation (FSR) is a partnership between the Robert Schuman Centre for Advanced Studies (RSCAS) at the European University Institute (EUI), the Council of the European Energy Regulators (CEER) and the Independent Regulators Group (IRG). Moreover, as part of the EUI, the FSR works closely with the European Commission.The objectives of the FSR are to promote informed discussions on key policy issues, through workshops and seminars, to provide state-of-the-art training for practitioners (from European Commission, National Regulators and private companies), to produce analytical and empirical researches about regulated sectors, to network, and to exchange documents and ideas.At present, its scope is focused on the regulation of Energy (electricity and gas markets), Communications & Media, and Transport.This series of working papers aims at disseminating the work of scholars and practitioners on current regulatory issues. For further information Florence School of Regulation AbstractIn many countries, distribution grid tariffs are being reformed to adapt to the new realities of an electricity system with distributed energy resources. In Europe, legislative proposals have been made to harmonize these reforms across country borders. Many stakeholders have argued that distribution tariffs are a local affair, while the EU institutions argued that there can be spillovers to other countries, which could justify a more harmonized approach. In this paper, we quantify these spillovers with a simplifed numerical example to give an order of magnitude. We look at different scenarios, and find that the spillovers can be both negative and positive. We also illustrate that the relative size of the countries is an important driver for the signifcance of the effects. To be able to quantify these effects, we developed a long-run market equilibrium model that captures the wholesale market effects of distribution grid tariffs. The problem is formulated as a non-cooperative game involving consumers, generating companies and distribution system operators in a stylized electricity market. Nomenclature Sets ASet of agents in the non-co...

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Designing Compensation for Distributed Solar Generation: Is Net Metering Ever Optimal?

Cited by 66 publications

References 25 publications

PV adoption: the role of distribution tariffs under net metering

PV adoption: the role of distribution tariffs under net metering

Least-cost Distribution Network Tariff Design in Theory and Practice

Spillover effects of distribution grid tariffs in the internal electricity market: An argument for harmonization?

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