Shadows behind the sun: Inequity caused by rooftop solar and responses to it

Liang Liang, Xuanyu Wu and Min Yang

Applied Energy, 2025, vol. 377, issue PB, No S0306261924019111

Abstract: The installation of photovoltaic (PV) systems has risen significantly as the global demand for renewable energy increases. Inequitable photovoltaic (PV) adoption exacerbates the energy burden on non-adopting households. Intervention in the PV deployment process is currently the dominant concept to address this challenge. Subsidizing low-income households to scale up PV adoption lacks sustainability, and curbing PV scale by reducing adopters’ benefits from PV has been shown to solidify this inequity. This study attempts to provide new ideas for solutions to eliminate the consequences of inequitable PV adoption without interfering with the scale of PV. We build a sequential game between a profit-maximizing power plant and a profit-maximizing electricity retailer to describe the optimal decisions of the relevant decision-makers in the face of unfair PV adoption. In addition, we construct an evolutionary game model of the electricity market to model the causes of and responses to long-term PV inequity. Our results show that PV results in a decrease in the wholesale price of electricity. However, the electricity retailer may not pass on the price decrease to households, which in turn leads to an increase in the cost of electricity for households that do not adopt PV, which is a new energy equity problem (i.e., price inequity). Subsequently, eliminating time-of-use tariff strategies for PV households and subsidizing the retailer in the early stages of PV deployment could decrease price inequity. In addition, we find that excessive adjustment decisions by the boundedly rational power plant and retailer can lead to electricity market instability and exacerbate the difficulty of decreasing long-run inequality while reducing their focus on the direction of profitability can help to eliminate long-run inequality.

Keywords: PV; Energy justice; Price inequity; Long term inequity; Bounded rationality (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.apenergy.2024.124528

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