Power from the People: Rooftop Solar and a Downward-Sloping Supply of Electricity

Andrea La Nauze

Journal of the Association of Environmental and Resource Economists, 2019, vol. 6, issue 6, 1135 - 1168

Abstract: Using high-frequency data, I show that the supply of electricity by solar households can be downward sloping. I document that households receiving higher prices to sell electricity increase their own consumption as their panels produce more, relative to households receiving lower prices. I test several competing explanations and show that a dollar of electricity income increases electricity expenditures by 23 cents, an effect much larger than a standard income response. The fact that solar households treat income from electricity production as “electricity money” means that production subsidies may decrease the supply of electricity by solar homes.

Date: 2019
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