Squaring the sunny circle? On balancing distributive justice of power grid costs and incentives for solar prosumers

Merla Kubli

Energy Policy, 2018, vol. 114, issue C, 173-188

Abstract: Solar prosumers are about to revolutionize the power sector. Utilities are challenged in recovering the costs of distribution grids, as parts of their revenue basis decreases through self-consumption. Adjusting the grid tariff sets off a reinforcing feedback loop that increases the attractiveness of solar investments, but also leads to a distribution effect between solar prosumers and conventional consumers. The question is: How to recover distribution grid costs equitable without hampering the diffusion of solar power? Can the two criteria be fulfilled at the same time, or is do we aim for squaring a circle? To address this question, I present a System Dynamics simulation model designed to understand the interactions and assess these competing goals. The occurring distribution effect under the volumetric grid tariff with net purchase and sale appears to be rather limited. Simulation experiments reveal that grid tariff designs strongly influence investments for solar power. A capacity tariff can reduce deviations from the cost causation principle of solar prosumers and incentivizes investments in decentralized storage solutions to reduce peak demand. Nevertheless, also the capacity tariff causes a distribution effect.

Keywords: Self-consumption; Death spiral; Grid tariff design; Net purchase and sale; Net metering; Grid cost recovery (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421517308005
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:114:y:2018:i:c:p:173-188

DOI: 10.1016/j.enpol.2017.11.054

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().