Harnessing electricity retail tariffs to support climate change policy

Lisa Ryan, Sarah La Monaca, Linda Mastrandrea and Petr Spodniak ()

Open Access publications from School of Economics, University College Dublin

Abstract: Legacy electricity retail tariffs are ill-adapted to future electricity systems and markets, particularly with regard to accommodating the multi-faceted shift toward decarbonisation. We examine how retail tariffs need to be reformed to not only meet the future revenue requirements of energy-suppliers and networks but also to help achieve the environmental objectives of the energy transition. While existing literature has explored the link between retail tariff structure design, wholesale markets and/or network cost recovery, there is less recognition of the impact of tariff structure design on environmental objectives. This paper reviews the demand responsiveness of household customers to electricity prices and implications of retail tariff structure and design for the policy targets of CO2 emissions, energy efficiency, and renewable electricity generation, in addition to electricity system. A review of the literature provides a theoretical basis for price elasticity of demand and electricity retail tariff design, and we explore the environmental implications for future retail tariff design options via examples of various tariff structures in the EU and US. The research links the topics of emissions mitigation policy and market design, and should add empirical insights to the body of academic literature on future electricity markets. It should also be of interest to policy makers wishing to consider retail tariff structures that promote decarbonisation of the electricity system through multiple objectives of improved energy efficiency and increased shares of renewable electricity within future electricity markets.

Keywords: Electricity systems; Decarbonisation; Energy transition; Retail tariff structure design (search for similar items in EconPapers)
Pages: 39 pages
Date: 2018-06
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published: The 6th World Congress of Environmental and Resource Economists (WCERE 2018), Gothenburg, Sweden, 25-29 June 20182018-06-29

Downloads: (external link)
http://hdl.handle.net/10197/9911 Open Access version, 2018 (application/pdf)

Related works:
Working Paper: Harnessing Electricity Retail Tariffs to Support Climate Change Policy (2018)
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:ucn:oapubs:10197/9911

Access Statistics for this paper

More papers in Open Access publications from School of Economics, University College Dublin Contact information at EDIRC.
Bibliographic data for series maintained by Nicolas Clifton ().