Economics at your fingertips  

Using solar PV feed-in tariff policy history to inform a sustainable flexible pricing regime to enhance the diffusion of energy storage and electric vehicles

William Bell and John Foster

Journal of Bioeconomics, 2017, vol. 19, issue 1, No 7, 127-145

Abstract: Abstract The aim of this paper is to analyses residential solar PV feed-in tariffs (FiT) policy history to inform the development of a sustainable flexible pricing regime to enhance the diffusion of energy storage, electric vehicles, solar PV installations and other distributed resources focusing on the case of ‘solar rich’ Australia. Solar PV has reached price parity at the retail level where the electricity price charged includes both transmission and distribution costs, in addition to the wholesale price. So the economic rationale for paying a FiT premium above market rates to achieve dynamic efficiency is no longer warranted. However, there is justification pay a premium to encourage dynamic innovation in energy storage. Socially, FiTs can be a problem because they can transfer wealth from poorer to richer households. Additionally, new investment in distribution and transmission, driven by peak demand spikes from air conditioners can act as a further transfer. Environmentally, FiTs can also fall short of their full potential to cut emissions if they lack ‘time of use’ price signals that reflect movements in the wholesale price. We suggest a sustainable flexible price regime that can be designed to addresses all three areas of concern: social, environmental and economic. The resultant transmission and distribution investment deferment would meet both environmental and economic objectives. We argue that the time has come to design a sustainable flexible price regime for solar PV that focusses upon allocative efficiency as an explicit goal and to introduce support for other distributed resources including energy storage to encourage dynamic efficiency.

Keywords: Renewable energy; Solar power; Photovoltaic; Feed in tariff; Energy policy (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to full text is restricted to subscribers.

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:

Ordering information: This journal article can be ordered from
http://www.springer. ... al/journal/10818/PS2

DOI: 10.1007/s10818-016-9240-9

Access Statistics for this article

Journal of Bioeconomics is currently edited by Ulrich Witt, Michael T. Ghiselin and David Sloan Wilson

More articles in Journal of Bioeconomics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2023-04-25
Handle: RePEc:kap:jbioec:v:19:y:2017:i:1:d:10.1007_s10818-016-9240-9