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The positive feedback cycle in the electricity market: Residential solar PV adoption, electricity demand and prices


  • Chesser, Michael
  • Hanly, Jim
  • Cassells, Damien
  • Apergis, Nicholas


Micro renewable energy systems (MRES) such as Photovoltaic (PV) are an increasingly important element of National energy strategies. However, the success of these installations has given rise to a positive feedback cycle whereby increased customer adoption results in reduced demand from Utility providers. This leads to price increases and further incentives customers to adopt MRES. This paper investigates the existence of a positive feedback cycle by developing a theoretical model based on simultaneous equations and estimating it using the three stage least squares approach using data from the UK, Australian and Irish Markets. Results indicate strong support for the idea of a positive feedback cycle. This reinforces the need for stakeholders to consider this issue in framing future energy policies to ensure that the adoption of solar PV is supported in a sustainable way, while not punishing non-adopters with higher electricity rates.

Suggested Citation

  • Chesser, Michael & Hanly, Jim & Cassells, Damien & Apergis, Nicholas, 2018. "The positive feedback cycle in the electricity market: Residential solar PV adoption, electricity demand and prices," Energy Policy, Elsevier, vol. 122(C), pages 36-44.
  • Handle: RePEc:eee:enepol:v:122:y:2018:i:c:p:36-44
    DOI: 10.1016/j.enpol.2018.07.032

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    Cited by:

    1. Opoku, Richard & Obeng, George Y. & Adjei, Eunice A. & Davis, Francis & Akuffo, Fred O., 2020. "Integrated system efficiency in reducing redundancy and promoting residential renewable energy in countries without net-metering: A case study of a SHS in Ghana," Renewable Energy, Elsevier, vol. 155(C), pages 65-78.
    2. Maheshwari, Aditya & Heleno, Miguel & Ludkovski, Michael, 2020. "The effect of rate design on power distribution reliability considering adoption of distributed energy resources," Applied Energy, Elsevier, vol. 268(C).
    3. Bolwig, Simon & Bazbauers, Gatis & Klitkou, Antje & Lund, Peter D. & Blumberga, Andra & Gravelsins, Armands & Blumberga, Dagnija, 2019. "Review of modelling energy transitions pathways with application to energy system flexibility," Renewable and Sustainable Energy Reviews, Elsevier, vol. 101(C), pages 440-452.


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