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Retail electricity tariff and mechanism design to incentivize distributed renewable generation

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  • Sioshansi, Ramteen

Abstract

This paper examines the question of how to incentivize the adoption and use of renewable energy resources, with particular attention on distributed renewable energy (DRE). Prior experience suggests that price and quantity-based programs, such as feed-in tariffs, provide more efficient renewable adoption and use and lower program costs than programs that set quantity targets only. We also examine some cost-allocation issues raised by the use of DRE systems and fixed time-invariant retail pricing. This combination can result in customers with DRE systems paying a disproportionately small portion of system capacity costs. We suggest two retail-pricing schemes, real-time pricing and a two-part tariff with demand charges, to address these issues.

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  • Sioshansi, Ramteen, 2016. "Retail electricity tariff and mechanism design to incentivize distributed renewable generation," Energy Policy, Elsevier, vol. 95(C), pages 498-508.
    • Handle: RePEc:eee:enepol:v:95:y:2016:i:c:p:498-508
    DOI: 10.1016/j.enpol.2015.12.041
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    14. Bustos, Cristian & Watts, David & Olivares, Daniel, 2019. "The evolution over time of Distributed Energy Resource’s penetration: A robust framework to assess the future impact of prosumage under different tariff designs," Applied Energy, Elsevier, vol. 256(C).
    15. Wadim Strielkowski & Elena Volkova & Luidmila Pushkareva & Dalia Streimikiene, 2019. "Innovative Policies for Energy Efficiency and the Use of Renewables in Households," Energies, MDPI, vol. 12(7), pages 1-17, April.
    16. Tayal, Dev & Evers, Uwana, 2018. "Consumer preferences and electricity pricing reform in Western Australia," Utilities Policy, Elsevier, vol. 54(C), pages 115-124.
    17. Fridgen, Gilbert & Kahlen, Micha & Ketter, Wolfgang & Rieger, Alexander & Thimmel, Markus, 2018. "One rate does not fit all: An empirical analysis of electricity tariffs for residential microgrids," Applied Energy, Elsevier, vol. 210(C), pages 800-814.
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    19. Heleno, Miguel & Sehloff, David & Coelho, Antonio & Valenzuela, Alan, 2020. "Probabilistic impact of electricity tariffs on distribution grids considering adoption of solar and storage technologies," Applied Energy, Elsevier, vol. 279(C).

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