IDEAS home Printed from https://ideas.repec.org/a/kap/regeco/v53y2018i1d10.1007_s11149-018-9350-5.html
   My bibliography  Save this article

The prosumers and the grid

Author

Listed:
  • Axel Gautier

    (University of Liege
    UCL
    CESifo)

  • Julien Jacqmin

    (University of Liege)

  • Jean-Christophe Poudou

    (University of Montpellier)

Abstract

Prosumers are households that are both producers and consumers of electricity. A prosumer has a grid-connected decentralized production unit and makes two types of exchanges with the grid: energy imports when the local production is insufficient to match the local consumption and energy exports when local production exceeds it. There exists two systems to measure the exchanges: a net metering system that uses a single meter to measure the balance between exports and imports and a net purchasing system that uses two meters to measure separately power exports and imports. Both systems are currently used for residential consumption. We build a model to compare the two metering systems. Under net metering, the price of exports paid to prosumers is implicitly set at the price of the electricity that they import. We show that net metering leads to (1) too many prosumers, (2) a decrease in the bills of prosumers, compensated via a higher bill for traditional consumers, and (3) a lack of incentives to synchronize local production and consumption.

Suggested Citation

  • Axel Gautier & Julien Jacqmin & Jean-Christophe Poudou, 2018. "The prosumers and the grid," Journal of Regulatory Economics, Springer, vol. 53(1), pages 100-126, February.
    • Handle: RePEc:kap:regeco:v:53:y:2018:i:1:d:10.1007_s11149-018-9350-5
    DOI: 10.1007/s11149-018-9350-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11149-018-9350-5
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11149-018-9350-5?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 look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. David P. Brown & David E. M. Sappington, 2017. "Optimal policies to promote efficient distributed generation of electricity," Journal of Regulatory Economics, Springer, vol. 52(2), pages 159-188, October.
    2. Darghouth, Naïm R. & Barbose, Galen & Wiser, Ryan, 2011. "The impact of rate design and net metering on the bill savings from distributed PV for residential customers in California," Energy Policy, Elsevier, vol. 39(9), pages 5243-5253, September.
    3. Luthander, Rasmus & Widén, Joakim & Nilsson, Daniel & Palm, Jenny, 2015. "Photovoltaic self-consumption in buildings: A review," Applied Energy, Elsevier, vol. 142(C), pages 80-94.
    4. Lori Bennear & Robert Stavins, 2007. "Second-best theory and the use of multiple policy instruments," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 111-129, May.
    5. De Groote, Olivier & Pepermans, Guido & Verboven, Frank, 2016. "Heterogeneity in the adoption of photovoltaic systems in Flanders," Energy Economics, Elsevier, vol. 59(C), pages 45-57.
    6. Eid, Cherrelle & Reneses Guillén, Javier & Frías Marín, Pablo & Hakvoort, Rudi, 2014. "The economic effect of electricity net-metering with solar PV: Consequences for network cost recovery, cross subsidies and policy objectives," Energy Policy, Elsevier, vol. 75(C), pages 244-254.
    7. David P. Brown & David E. M. Sappington, 2017. "Designing Compensation for Distributed Solar Generation: Is Net Metering Ever Optimal?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    8. Jamasb, Tooraj & Pollitt, Michael, 2007. "Incentive regulation of electricity distribution networks: Lessons of experience from Britain," Energy Policy, Elsevier, vol. 35(12), pages 6163-6187, December.
    9. Dufo-López, Rodolfo & Bernal-Agustín, José L., 2015. "A comparative assessment of net metering and net billing policies. Study cases for Spain," Energy, Elsevier, vol. 84(C), pages 684-694.
    10. Severin Borenstein & James Bushnell, 2015. "The US Electricity Industry After 20 Years of Restructuring," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 437-463, August.
    11. Ringel, Marc, 2006. "Fostering the use of renewable energies in the European Union: the race between feed-in tariffs and green certificates," Renewable Energy, Elsevier, vol. 31(1), pages 1-17.
    12. Coelli, Tim J. & Gautier, Axel & Perelman, Sergio & Saplacan-Pop, Roxana, 2013. "Estimating the cost of improving quality in electricity distribution: A parametric distance function approach," Energy Policy, Elsevier, vol. 53(C), pages 287-297.
    13. Hartway, Rob & Price, Snuller & Woo, C.K, 1999. "Smart meter, customer choice and profitable time-of-use rate option," Energy, Elsevier, vol. 24(10), pages 895-903.
    14. Richard Schmalensee, 2012. "Evaluating Policies to Increase Electricity Generation from Renewable Energy," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 6(1), pages 45-64.
    15. Picciariello, Angela & Vergara, Claudio & Reneses, Javier & Frías, Pablo & Söder, Lennart, 2015. "Electricity distribution tariffs and distributed generation: Quantifying cross-subsidies from consumers to prosumers," Utilities Policy, Elsevier, vol. 37(C), pages 23-33.
    16. Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
    17. Cai, Desmond W.H. & Adlakha, Sachin & Low, Steven H. & De Martini, Paul & Mani Chandy, K., 2013. "Impact of residential PV adoption on Retail Electricity Rates," Energy Policy, Elsevier, vol. 62(C), pages 830-843.
    18. Lang, Tillmann & Ammann, David & Girod, Bastien, 2016. "Profitability in absence of subsidies: A techno-economic analysis of rooftop photovoltaic self-consumption in residential and commercial buildings," Renewable Energy, Elsevier, vol. 87(P1), pages 77-87.
    Full references (including those not matched with items on IDEAS)

    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. Ahmed S. Alahmed & Lang Tong, 2022. "Integrating Distributed Energy Resources: Optimal Prosumer Decisions and Impacts of Net Metering Tariffs," Papers 2204.06115, arXiv.org, revised May 2022.
    2. Castaneda, Monica & Jimenez, Maritza & Zapata, Sebastian & Franco, Carlos J. & Dyner, Isaac, 2017. "Myths and facts of the utility death spiral," Energy Policy, Elsevier, vol. 110(C), pages 105-116.
    3. Gautier, Axel & Jacqmin, Julien & Poudou, Jean-Christophe, 2021. "Optimal grid tariffs with heterogeneous prosumers," Utilities Policy, Elsevier, vol. 68(C).
    4. Axel Gautier & Julien Jacqmin, 2020. "PV adoption: the role of distribution tariffs under net metering," Journal of Regulatory Economics, Springer, vol. 57(1), pages 53-73, February.
    5. L. (Lisa B.) Ryan & Sarah La Monaca & Linda Mastrandrea & Petr Spodniak, 2018. "Harnessing Electricity Retail Tariffs to Support Climate Change Policy," Working Papers 201822, School of Economics, University College Dublin.
    6. Johnson, Erik & Beppler, Ross & Blackburn, Chris & Staver, Benjamin & Brown, Marilyn & Matisoff, Daniel, 2017. "Peak shifting and cross-class subsidization: The impacts of solar PV on changes in electricity costs," Energy Policy, Elsevier, vol. 106(C), pages 436-444.
    7. Kubli, Merla, 2018. "Squaring the sunny circle? On balancing distributive justice of power grid costs and incentives for solar prosumers," Energy Policy, Elsevier, vol. 114(C), pages 173-188.
    8. De Groote, Olivier & Gautier, Axel & Verboven, Frank, 2024. "The political economy of financing climate policy — Evidence from the solar PV subsidy programs," Resource and Energy Economics, Elsevier, vol. 77(C).
    9. Nikolaidis, Alexandros I. & Charalambous, Charalambos A., 2017. "Hidden financial implications of the net energy metering practice in an isolated power system: Critical review and policy insights," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 706-717.
    10. Clastres, Cédric & Percebois, Jacques & Rebenaque, Olivier & Solier, Boris, 2019. "Cross subsidies across electricity network users from renewable self-consumption," Utilities Policy, Elsevier, vol. 59(C), pages 1-1.
    11. Georgios C. Christoforidis & Ioannis P. Panapakidis & Theofilos A. Papadopoulos & Grigoris K. Papagiannis & Ioannis Koumparou & Maria Hadjipanayi & George E. Georghiou, 2016. "A Model for the Assessment of Different Net-Metering Policies," Energies, MDPI, vol. 9(4), pages 1-24, April.
    12. Darghouth, Naïm R. & Wiser, Ryan H. & Barbose, Galen & Mills, Andrew D., 2016. "Net metering and market feedback loops: Exploring the impact of retail rate design on distributed PV deployment," Applied Energy, Elsevier, vol. 162(C), pages 713-722.
    13. 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.
    14. Bruno Moreno Rodrigo de Freitas, 2020. "Quantifying the effect of regulated volumetric electriciy tariffs on residential PV adoption under net metering scheme," Working papers of CATT hal-02976874, HAL.
    15. Moncada, J.A. & Tao, Z. & Valkering, P. & Meinke-Hubeny, F. & Delarue, E., 2021. "Influence of distribution tariff structures and peer effects on the adoption of distributed energy resources," Applied Energy, Elsevier, vol. 298(C).
    16. Carlos J. Sarasa-Maestro & Rodolfo Dufo-López & José L. Bernal-Agustín, 2016. "Analysis of Photovoltaic Self-Consumption Systems," Energies, MDPI, vol. 9(9), pages 1-18, August.
    17. Venkatraman, Athindra & Thatte, Anupam A. & Xie, Le, 2021. "A smart meter data-driven distribution utility rate model for networks with prosumers," Utilities Policy, Elsevier, vol. 70(C).
    18. Junhyung Kim & Keon Baek & Eunjung Lee & Jinho Kim, 2023. "Analysis of Net-Metering and Cross-Subsidy Effects in South Korea: Economic Impact across Residential Customer Groups by Electricity Consumption Level," Energies, MDPI, vol. 16(2), pages 1-14, January.
    19. Fikru, Mahelet G., 2019. "Estimated electricity bill savings for residential solar photovoltaic system owners: Are they accurate enough?," Applied Energy, Elsevier, vol. 253(C), pages 1-1.
    20. Sakah, Marriette & Diawuo, Felix Amankwah & Katzenbach, Rolf & Gyamfi, Samuel, 2017. "Towards a sustainable electrification in Ghana: A review of renewable energy deployment policies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 79(C), pages 544-557.

    More about this item

    Keywords

    Decentralized production unit; Grid regulation; Solar panel; Grid tariff; Storage;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

    Statistics

    Access and download statistics

    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:kap:regeco:v:53:y:2018:i:1:d:10.1007_s11149-018-9350-5. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.