Cross-subsidies among residential electricity prosumers from tariff design and metering infrastructure

Mohammad Ansarin, Yashar Ghiassi-Farrokhfal, Wolfgang Ketter and John Collins

Energy Policy, 2020, vol. 145, issue C

Abstract: Distributed renewable energy sources (D-RES) are growing, transforming electricity consumers into producer–consumers (“prosumers”). Retail electricity tariffs require new mechanisms to fairly purchase D-RES generation from and transfer costs to prosumers. Otherwise, cross-subsidy (wealth transfers from some prosumers to others) can worsen tariff outcomes. Tariffs depend on metering infrastructure, where two choices can significantly impact cross-subsidies: (a) metering generation and consumption separately, and (b) using advanced metering infrastructure (AMI) that allows for more granular accounting of energy trade. We use high-resolution energy data from 2016 from Austin, TX, USA, to study these impacts in a high-D-RES distribution grid. We consider multiple tariffs and metering scenarios, thus separating their effects. We find that traditional tariffs using legacy metering create median annual cross-subsidy values from 38% to 100% of real costs. However, AMI can reduce these values by 2 to 3 orders of magnitude when a tariff that utilizes AMI’s options is used. In contrast, metering generation separately from consumption appears to have little impact on cross-subsidies. Our results have implications for metering infrastructure choices and tariff design for grids undergoing rapid growth of D-RES generation.

Keywords: Electricity metering; Renewable energy; Tariff design; Cross-subsidies (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:145:y:2020:i:c:s0301421520304614

DOI: 10.1016/j.enpol.2020.111736

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