Evaluating the externality value of distributed photovoltaics: Industry-specific investment decisions under diverse pricing schemes

Congyi Wang, Zhaoyuan Wu, Lanyi Wei, Linyan Yang, Yihan Zhang, Bo Yuan and Ming Zhou

Renewable Energy, 2025, vol. 247, issue C

Abstract: With the advancement of distributed generation technologies, distributed photovoltaic (PV) have become essential components in the decarbonization process. However, accurately assessing the externality value of distributed PV and storage systems across various stages of market reform remains a challenge, particularly considering the diversity in energy consumption behaviors and market environments across industries. In this paper, we propose a bi-level model-based framework for evaluating the externality value of distributed PV systems, effectively analyzing the interactions between diverse industry end-users and system operations under distinct pricing mechanisms, such as time-of-use and market-based pricing. Moreover, this framework is highly extensible, allowing it to capture two critical aspects in the externality value evaluation of rooftop solar installations: variations in decision-making behaviors among industry users, and differences in pricing mechanisms across market reform stages. Case studies using real-world datasets reveal significant differences in distributed PV investment preferences across industries; specifically, the secondary sector, due to higher electricity costs, exhibits a stronger reliance on distributed PV compared to the tertiary sector, a disparity that is more pronounced under time-of-use pricing. It is hoped that this study will provide theoretical support and simulation tools to inform relevant policy design for distributed photovoltaics across various industry sectors.

Keywords: Distributed photovoltaic-energy storage system; Externality value; Industry differences; Time-of-use mechanism; Market mechanism (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:renene:v:247:y:2025:i:c:s0960148125006482

DOI: 10.1016/j.renene.2025.122986

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