Peak-valley tariffs and solar prosumers: Why renewable energy policies should target local electricity markets

Boqiang Lin (), Jiaying Chen and Presley K. Wesseh

Energy Policy, 2022, vol. 165, issue C

Abstract: There is a growing recognition that local electricity markets (LEMs) for distributed power resources are technically and economically feasible. However, the conditions under which these markets can create value for prosumers and consumers (P&C) and ensure overall welfare for society are insufficiently understood. To help address this literature gap, this paper takes China as a case to study a local electricity market that is driven by peer-to-peer trading. The results show that peak-valley tariffs increase cost-savings for P&C at the expense of grid revenue and the larger the peak-valley spread, the greater the benefits to P&C and, hence, losses to the grid. In addition, the study finds that the value of solar PV declines when deployment of solar technology increases linearly with storage installation in the market. Because the declining value of variable renewable energy may be especially problematic in wholesale electricity markets (WEMs), this study argues that as long as storage installation increases at a faster rate than variable renewable energy deployment, LEMs that operate independent of the central grid can potentially offer a more cost-effective option for large-scale renewable energy utilization. These results underscore the importance of government policies that seek to promote the development of LEMs.

Keywords: Solar prosumers; Local electricity markets; Peak-valley tariffs; Peer-to-peer trading; China (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421522002099
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:165:y:2022:i:c:s0301421522002099

DOI: 10.1016/j.enpol.2022.112984

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 ().