IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v333y2023ics0306261922018396.html
   My bibliography  Save this article

Shaping the energy transition in the residential sector: Regulatory incentives for aligning household and system perspectives

Author

Listed:
  • Aniello, Gianmarco
  • Bertsch, Valentin

Abstract

The regulatory framework influences households’ decisions in the context of the energy transition, affecting the potential for CO2 emissions savings and the operation of the electrical network infrastructure. In this paper, the profitability and optimal operation of alternative home energy systems (HESs) consisting of photovoltaics (PV), battery energy storage (BES), and either a gas condensing boiler (GB) or an electrical air-to-water heat pump (HP) is investigated for the case of a German single-family house and across alternative regulatory scenarios. Two policy reforms are considered: (i) an alternative design of network tariffs, the objectives of which are the financial sustainability and the efficient operation of the power grid, as well as the cost reflectivity of such charges; and (ii) a CO2-oriented reform of energy taxes and surcharges on retail energy prices. For the latter, the real-time carbon intensity of grid electricity is estimated and priced in dynamic retail electricity rates. After the optimization of the operation of each alternative HES under such alternative sets of price signals, a simulation over a 20-year planning horizon is carried out in order to evaluate each option in terms of profitability, impact on CO2 emissions and grid integration. The findings show how a change of regulatory framework can foster a low-carbon-oriented and grid-friendly adoption and operation of energy technologies. In the case under analysis, a regulatory shift: (i) results in a decrease of up to 17% in the discounted lifetime costs of the HP heating, thereby steering the household’s adoption decision towards a reduction of up to 63% in CO2 emissions; (ii) induces a grid-oriented operation of the HP and the BES, reducing coincident peak demand by up to 62%. The implications of such a regulatory shift are discussed in relation to the effectiveness, cost efficiency and distributional fairness of the energy transition in the residential sector.

Suggested Citation

  • Aniello, Gianmarco & Bertsch, Valentin, 2023. "Shaping the energy transition in the residential sector: Regulatory incentives for aligning household and system perspectives," Applied Energy, Elsevier, vol. 333(C).
    • Handle: RePEc:eee:appene:v:333:y:2023:i:c:s0306261922018396
    DOI: 10.1016/j.apenergy.2022.120582
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261922018396
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2022.120582?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Beck, T. & Kondziella, H. & Huard, G. & Bruckner, T., 2017. "Optimal operation, configuration and sizing of generation and storage technologies for residential heat pump systems in the spotlight of self-consumption of photovoltaic electricity," Applied Energy, Elsevier, vol. 188(C), pages 604-619.
    2. Wolf-Peter Schill, Alexander Zerrahn, and Friedrich Kunz, 2017. "Prosumage of solar electricity: pros, cons, and the system perspective," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    3. Günther, Claudia & Schill, Wolf-Peter & Zerrahn, Alexander, 2021. "Prosumage of solar electricity: Tariff design, capacity investments, and power sector effects," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 152.
    4. Say, Kelvin & Schill, Wolf-Peter & John, Michele, 2020. "Degrees of displacement: The impact of household PV battery prosumage on utility generation and storage," Applied Energy, Elsevier, vol. 276(C).
    5. Litjens, G.B.M.A. & Worrell, E. & van Sark, W.G.J.H.M., 2018. "Assessment of forecasting methods on performance of photovoltaic-battery systems," Applied Energy, Elsevier, vol. 221(C), pages 358-373.
    6. Manuel Frondel & Christoph M. Schmidt & Colin Vance, 2014. "Revisiting Germanyùs solar cell promotion: An unfolding disaster," Economic Analysis and Policy, Elsevier, vol. 44(1), pages 3-13.
    7. Ignacio J. Pérez-Arriaga, Jesse D. Jenkins, and Carlos Batlle, 2017. "A regulatory framework for an evolving electricity sector: Highlights of the MIT utility of the future study," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    8. Klein, Martin & Ziade, Ahmad & de Vries, Laurens, 2019. "Aligning prosumers with the electricity wholesale market – The impact of time-varying price signals and fixed network charges on solar self-consumption," Energy Policy, Elsevier, vol. 134(C).
    9. Fett, Daniel & Fraunholz, Christoph & Keles, Dogan, 2021. "Diffusion and system impact of residential battery storage under different regulatory settings," Energy Policy, Elsevier, vol. 158(C).
    10. Young, Sharon & Bruce, Anna & MacGill, Iain, 2019. "Potential impacts of residential PV and battery storage on Australia's electricity networks under different tariffs," Energy Policy, Elsevier, vol. 128(C), pages 616-627.
    11. Klingler, Anna-Lena, 2018. "The effect of electric vehicles and heat pumps on the market potential of PV + battery systems," Energy, Elsevier, vol. 161(C), pages 1064-1073.
    12. Parra, David & Patel, Martin K., 2016. "Effect of tariffs on the performance and economic benefits of PV-coupled battery systems," Applied Energy, Elsevier, vol. 164(C), pages 175-187.
    13. Schopfer, S. & Tiefenbeck, V. & Staake, T., 2018. "Economic assessment of photovoltaic battery systems based on household load profiles," Applied Energy, Elsevier, vol. 223(C), pages 229-248.
    14. Aniello, Gianmarco & Shamon, Hawal & Kuckshinrichs, Wilhelm, 2021. "Micro-economic assessment of residential PV and battery systems: The underrated role of financial and fiscal aspects," Applied Energy, Elsevier, vol. 281(C).
    15. Kaschub, Thomas & Jochem, Patrick & Fichtner, Wolf, 2016. "Solar energy storage in German households: profitability, load changes and flexibility," Energy Policy, Elsevier, vol. 98(C), pages 520-532.
    16. Staffell, Iain & Pfenninger, Stefan, 2016. "Using bias-corrected reanalysis to simulate current and future wind power output," Energy, Elsevier, vol. 114(C), pages 1224-1239.
    17. López Prol, Javier & Steininger, Karl W., 2017. "Photovoltaic self-consumption regulation in Spain: Profitability analysis and alternative regulation schemes," Energy Policy, Elsevier, vol. 108(C), pages 742-754.
    18. Lahnaoui, Amin & Stenzel, Peter & Linssen, Jochen, 2018. "Techno-economic analysis of photovoltaic battery system configuration and location☆," Applied Energy, Elsevier, vol. 227(C), pages 497-505.
    19. Schram, Wouter L. & Lampropoulos, Ioannis & van Sark, Wilfried G.J.H.M., 2018. "Photovoltaic systems coupled with batteries that are optimally sized for household self-consumption: Assessment of peak shaving potential," Applied Energy, Elsevier, vol. 223(C), pages 69-81.
    20. Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M. & Vance, Colin, 2010. "Economic impacts from the promotion of renewable energy technologies: The German experience," Energy Policy, Elsevier, vol. 38(8), pages 4048-4056, August.
    21. Angenendt, Georg & Zurmühlen, Sebastian & Axelsen, Hendrik & Sauer, Dirk Uwe, 2018. "Comparison of different operation strategies for PV battery home storage systems including forecast-based operation strategies," Applied Energy, Elsevier, vol. 229(C), pages 884-899.
    22. Dietrich, Andreas & Weber, Christoph, 2018. "What drives profitability of grid-connected residential PV storage systems? A closer look with focus on Germany," Energy Economics, Elsevier, vol. 74(C), pages 399-416.
    23. Bloess, Andreas & Schill, Wolf-Peter & Zerrahn, Alexander, 2018. "Power-to-heat for renewable energy integration: A review of technologies, modeling approaches, and flexibility potentials," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 212, pages 1611-1626.
    24. Fett, Daniel & Fraunholz, Christoph & Keles, Dogan, 2021. "Diffusion and system impact of residential battery storage under different regulatory settings," Working Paper Series in Production and Energy 55, Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP).
    25. Passey, Robert & Haghdadi, Navid & Bruce, Anna & MacGill, Iain, 2017. "Designing more cost reflective electricity network tariffs with demand charges," Energy Policy, Elsevier, vol. 109(C), pages 642-649.
    26. Andor, Mark & Frondel, Manuel & Vance, Colin, 2015. "Installing Photovoltaics in Germany: A license to print money?," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 106-116.
    27. Bo Tranberg & Olivier Corradi & Bruno Lajoie & Thomas Gibon & Iain Staffell & Gorm Bruun Andresen, 2018. "Real-Time Carbon Accounting Method for the European Electricity Markets," Papers 1812.06679, arXiv.org, revised May 2019.
    28. Bertsch, Valentin & Geldermann, Jutta & Lühn, Tobias, 2017. "What drives the profitability of household PV investments, self-consumption and self-sufficiency?," Applied Energy, Elsevier, vol. 204(C), pages 1-15.
    29. Pfenninger, Stefan & Staffell, Iain, 2016. "Long-term patterns of European PV output using 30 years of validated hourly reanalysis and satellite data," Energy, Elsevier, vol. 114(C), pages 1251-1265.
    30. O'Shaughnessy, Eric & Cutler, Dylan & Ardani, Kristen & Margolis, Robert, 2018. "Solar plus: A review of the end-user economics of solar PV integration with storage and load control in residential buildings," Applied Energy, Elsevier, vol. 228(C), pages 2165-2175.
    31. Russo, Marianna & Bertsch, Valentin, 2020. "A looming revolution: Implications of self-generation for the risk exposure of retailers," Energy Economics, Elsevier, vol. 92(C).
    32. Ossenbrink, Jan, 2017. "How feed-in remuneration design shapes residential PV prosumer paradigms," Energy Policy, Elsevier, vol. 108(C), pages 239-255.
    33. Linssen, Jochen & Stenzel, Peter & Fleer, Johannes, 2017. "Techno-economic analysis of photovoltaic battery systems and the influence of different consumer load profiles," Applied Energy, Elsevier, vol. 185(P2), pages 2019-2025.
    34. Quoilin, Sylvain & Kavvadias, Konstantinos & Mercier, Arnaud & Pappone, Irene & Zucker, Andreas, 2016. "Quantifying self-consumption linked to solar home battery systems: Statistical analysis and economic assessment," Applied Energy, Elsevier, vol. 182(C), pages 58-67.
    35. Jägemann, Cosima & Hagspiel, Simeon & Lindenberger, Dietmar, 2013. "The Economic Inefficiency of Grid Parity: The Case of German Photovoltaics," EWI Working Papers 2013-19, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    36. La Monaca, Sarah & Ryan, Lisa, 2017. "Solar PV where the sun doesn’t shine: Estimating the economic impacts of support schemes for residential PV with detailed net demand profiling," Energy Policy, Elsevier, vol. 108(C), pages 731-741.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hussain, Shahid & Irshad, Reyazur Rashid & Pallonetto, Fabiano & Hussain, Ihtisham & Hussain, Zakir & Tahir, Muhammad & Abimannan, Satheesh & Shukla, Saurabh & Yousif, Adil & Kim, Yun-Su & El-Sayed, H, 2023. "Hybrid coordination scheme based on fuzzy inference mechanism for residential charging of electric vehicles," Applied Energy, Elsevier, vol. 352(C).
    2. Bożena Gajdzik & Magdalena Jaciow & Radosław Wolniak & Robert Wolny & Wieslaw Wes Grebski, 2023. "Energy Behaviors of Prosumers in Example of Polish Households," Energies, MDPI, vol. 16(7), pages 1-26, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aniello, Gianmarco & Shamon, Hawal & Kuckshinrichs, Wilhelm, 2021. "Micro-economic assessment of residential PV and battery systems: The underrated role of financial and fiscal aspects," Applied Energy, Elsevier, vol. 281(C).
    2. Günther, Claudia & Schill, Wolf-Peter & Zerrahn, Alexander, 2021. "Prosumage of solar electricity: Tariff design, capacity investments, and power sector effects," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 152.
    3. Claudia Gunther & Wolf-Peter Schill & Alexander Zerrahn, 2019. "Prosumage of solar electricity: tariff design, capacity investments, and power system effects," Papers 1907.09855, arXiv.org.
    4. Olivella, Jordi & Domenech, Bruno & Calleja, Gema, 2021. "Potential of implementation of residential photovoltaics at city level: The case of London," Renewable Energy, Elsevier, vol. 180(C), pages 577-585.
    5. Fett, Daniel & Fraunholz, Christoph & Keles, Dogan, 2021. "Diffusion and system impact of residential battery storage under different regulatory settings," Energy Policy, Elsevier, vol. 158(C).
    6. Ma, Tao & Zhang, Yijie & Gu, Wenbo & Xiao, Gang & Yang, Hongxing & Wang, Shuxiao, 2022. "Strategy comparison and techno-economic evaluation of a grid-connected photovoltaic-battery system," Renewable Energy, Elsevier, vol. 197(C), pages 1049-1060.
    7. O'Shaughnessy, Eric & Cutler, Dylan & Ardani, Kristen & Margolis, Robert, 2018. "Solar plus: A review of the end-user economics of solar PV integration with storage and load control in residential buildings," Applied Energy, Elsevier, vol. 228(C), pages 2165-2175.
    8. Say, Kelvin & John, Michele & Dargaville, Roger, 2019. "Power to the people: Evolutionary market pressures from residential PV battery investments in Australia," Energy Policy, Elsevier, vol. 134(C).
    9. Say, Kelvin & Schill, Wolf-Peter & John, Michele, 2020. "Degrees of displacement: The impact of household PV battery prosumage on utility generation and storage," Applied Energy, Elsevier, vol. 276(C).
    10. Arnold, Fabian & Jeddi, Samir & Sitzmann, Amelie, 2022. "How prices guide investment decisions under net purchasing — An empirical analysis on the impact of network tariffs on residential PV," Energy Economics, Elsevier, vol. 112(C).
    11. Andreolli, Francesca & D’Alpaos, Chiara & Moretto, Michele, 2022. "Valuing investments in domestic PV-Battery Systems under uncertainty," Energy Economics, Elsevier, vol. 106(C).
    12. Say, Kelvin & John, Michele, 2021. "Molehills into mountains: Transitional pressures from household PV-battery adoption under flat retail and feed-in tariffs," Energy Policy, Elsevier, vol. 152(C).
    13. Schopfer, S. & Tiefenbeck, V. & Staake, T., 2018. "Economic assessment of photovoltaic battery systems based on household load profiles," Applied Energy, Elsevier, vol. 223(C), pages 229-248.
    14. Gallego-Castillo, Cristobal & Heleno, Miguel & Victoria, Marta, 2021. "Self-consumption for energy communities in Spain: A regional analysis under the new legal framework," Energy Policy, Elsevier, vol. 150(C).
    15. Nina Munzke & Felix Büchle & Anna Smith & Marc Hiller, 2021. "Influence of Efficiency, Aging and Charging Strategy on the Economic Viability and Dimensioning of Photovoltaic Home Storage Systems," Energies, MDPI, vol. 14(22), pages 1-46, November.
    16. Neetzow, Paul & Mendelevitch, Roman & Siddiqui, Sauleh, 2019. "Modeling coordination between renewables and grid: Policies to mitigate distribution grid constraints using residential PV-battery systems," Energy Policy, Elsevier, vol. 132(C), pages 1017-1033.
    17. Roberts, Mike B. & Bruce, Anna & MacGill, Iain, 2019. "Impact of shared battery energy storage systems on photovoltaic self-consumption and electricity bills in apartment buildings," Applied Energy, Elsevier, vol. 245(C), pages 78-95.
    18. Jessica Thomsen & Christoph Weber, "undated". "How the design of retail prices, network charges, and levies affects profitability and operation of small-scale PV-Battery Storage Systems," EWL Working Papers 1903, University of Duisburg-Essen, Chair for Management Science and Energy Economics.
    19. Bruno Domenech & Gema Calleja & Jordi Olivella, 2021. "Residential Photovoltaic Profitability with Storage under the New Spanish Regulation: A Multi-Scenario Analysis," Energies, MDPI, vol. 14(7), pages 1-17, April.
    20. Frank Fiedler & Joaquin Coll Matas, 2022. "Techno-Economic Analysis of Grid-Connected PV Battery Solutions for Holiday Homes in Sweden," Energies, MDPI, vol. 15(8), pages 1-21, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:333:y:2023:i:c:s0306261922018396. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.