IDEAS home Printed from https://ideas.repec.org/a/kap/regeco/v57y2020i1d10.1007_s11149-019-09397-6.html
   My bibliography  Save this article

PV adoption: the role of distribution tariffs under net metering

Author

Listed:
  • Axel Gautier

    (HEC Liege, LCII, University of Liege
    CORE, UCLouvain
    CESifo)

  • Julien Jacqmin

    (NEOMA Business School)

Abstract

The deployment of decentralized productions units (DPU) like rooftop solar panels is a major challenge for a transition towards greener energy sources. Under a net metering system where the meter runs backward when there is excessive PV production, the electricity produced by a solar panel is valued at the retail price. Higher retail prices thus encourage the deployment of DPU. To identify this relationship, we use data from Wallonia where tariffs are paid on a mostly volumetric base and where there are 13 different tariff zones. Using various specifications, our results suggest that in a municipality where the distribution tariff is one eurocent per kWh higher, the investment in solar PV is, all else equal, around 8% higher.

Suggested Citation

  • 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.
    • Handle: RePEc:kap:regeco:v:57:y:2020:i:1:d:10.1007_s11149-019-09397-6
    DOI: 10.1007/s11149-019-09397-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11149-019-09397-6
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11149-019-09397-6?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. Germeshausen, Robert, 2016. "Effects of Attribute-Based Regulation on Technology Adoption - The Case of Feed-In Tariffs for Solar Photovoltaic," VfS Annual Conference 2016 (Augsburg): Demographic Change 145712, Verein für Socialpolitik / German Economic Association.
    2. 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.
    3. 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.
    4. Houde, Sébastien & Myers, Erica, 2021. "Are consumers attentive to local energy costs? Evidence from the appliance market," Journal of Public Economics, Elsevier, vol. 201(C).
    5. Anderson, Soren T. & Kellogg, Ryan & Sallee, James M., 2013. "What do consumers believe about future gasoline prices?," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 383-403.
    6. Jonathan E. Hughes & Molly Podolefsky, 2015. "Getting Green with Solar Subsidies: Evidence from the California Solar Initiative," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(2), pages 235-275.
    7. Menz, Fredric C. & Vachon, Stephan, 2006. "The effectiveness of different policy regimes for promoting wind power: Experiences from the states," Energy Policy, Elsevier, vol. 34(14), pages 1786-1796, September.
    8. Koichiro Ito, 2014. "Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing," American Economic Review, American Economic Association, vol. 104(2), pages 537-563, February.
    9. Sven Müller & Johannes Rode, 2013. "The adoption of photovoltaic systems in Wiesbaden, Germany," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 22(5), pages 519-535, July.
    10. Olivier De Groote & Frank Verboven, 2019. "Subsidies and Time Discounting in New Technology Adoption: Evidence from Solar Photovoltaic Systems," American Economic Review, American Economic Association, vol. 109(6), pages 2137-2172, June.
    11. Jacksohn, Anke & Grösche, Peter & Rehdanz, Katrin & Schröder, Carsten, 2019. "Drivers of renewable technology adoption in the household sector," Energy Economics, Elsevier, vol. 81(C), pages 216-226.
    12. Hinz, Fabian & Schmidt, Matthew & Möst, Dominik, 2018. "Regional distribution effects of different electricity network tariff designs with a distributed generation structure: The case of Germany," Energy Policy, Elsevier, vol. 113(C), pages 97-111.
    13. Wooldridge, Jeffrey M., 1999. "Distribution-free estimation of some nonlinear panel data models," Journal of Econometrics, Elsevier, vol. 90(1), pages 77-97, May.
    14. 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.
    15. 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).
    16. Matisoff, Daniel C. & Johnson, Erik P., 2017. "The comparative effectiveness of residential solar incentives," Energy Policy, Elsevier, vol. 108(C), pages 44-54.
    17. 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.
    18. Crago, Christine Lasco & Chernyakhovskiy, Ilya, 2017. "Are policy incentives for solar power effective? Evidence from residential installations in the Northeast," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 132-151.
    19. Jean-Christophe Poudou & Axel Gautier & Julien Jacqmin, 2018. "The prosumers and the grid," Post-Print hal-01810028, HAL.
    20. Newell, Richard G. & Pizer, William A. & Raimi, Daniel, 2019. "U.S. federal government subsidies for clean energy: Design choices and implications," Energy Economics, Elsevier, vol. 80(C), pages 831-841.
    21. Severin Borenstein, 2017. "Private Net Benefits of Residential Solar PV: The Role of Electricity Tariffs, Tax Incentives, and Rebates," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(S1), pages 85-122.
    22. Vasseur, Véronique & Kemp, René, 2015. "The adoption of PV in the Netherlands: A statistical analysis of adoption factors," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 483-494.
    23. Bryan Bollinger & Kenneth Gillingham, 2012. "Peer Effects in the Diffusion of Solar Photovoltaic Panels," Marketing Science, INFORMS, vol. 31(6), pages 900-912, November.
    24. Julien Jacqmin, 2018. "The role of market-oriented institutions in the deployment of renewable energies: evidences from Europe," Applied Economics, Taylor & Francis Journals, vol. 50(2), pages 202-215, January.
    25. Jacobsen, Grant D., 2015. "Do energy prices influence investment in energy efficiency? Evidence from energy star appliances," Journal of Environmental Economics and Management, Elsevier, vol. 74(C), pages 94-106.
    26. 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.
    27. Ross Baldick, 2018. "Incentive properties of coincident peak pricing," Journal of Regulatory Economics, Springer, vol. 54(2), pages 165-194, October.
    28. Schittekatte, Tim & Momber, Ilan & Meeus, Leonardo, 2018. "Future-proof tariff design: Recovering sunk grid costs in a world where consumers are pushing back," Energy Economics, Elsevier, vol. 70(C), pages 484-498.
    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. Hindriks, Jean & Serse, Valerio, 2022. "The incidence of VAT reforms in electricity markets: Evidence from Belgium," International Journal of Industrial Organization, Elsevier, vol. 80(C).
    2. 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.
    3. Axel Gautier & Julien Jacqmin, 2019. "Une nouvelle tarification des réseaux pour favoriser la transition énergétique," LIDAM Reprints CORE 2995, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. 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).
    5. Bergaentzle, Claire & Gunkel, Philipp Andreas, 2022. "Cross-sector flexibility, storage investment and the integration of renewables: Capturing the impacts of grid tariffs," Energy Policy, Elsevier, vol. 164(C).
    6. Hashemi, Majid & Jenkins, Glenn & Milne, Frank, 2023. "Rooftop solar with net metering: An integrated investment appraisal," Renewable and Sustainable Energy Reviews, Elsevier, vol. 188(C).
    7. Johanna Fink, 2023. "Can the creation of separate bidding zones within countries create imbalances in PV uptake? Evidence from Sweden," Papers 2312.16161, arXiv.org.
    8. Olivier De Groote & Axel Gautier & Frank Verboven, 2020. "The political economic of financing climate policy : evidence from the solar PV subsidy programs," Working Paper Research 389, National Bank of Belgium.
    9. Bruno Moreno Rodrigo de Freitas, 2020. "Quantifying the effect of regulated volumetric electriciy tariffs on residential PV adoption under net metering scheme," Working Papers hal-02976874, HAL.
    10. Soheil Mohseni & Jay Rutovitz & Heather Smith & Scott Dwyer & Farzan Tahir, 2023. "Economic Viability Assessment of Neighbourhood versus Residential Batteries: Insights from an Australian Case Study," Sustainability, MDPI, vol. 15(23), pages 1-27, November.
    11. Shimada, Hideki & Honda, Tomonori, 2022. "What drives households’ choices of residential solar photovoltaic capacity?," Energy Policy, Elsevier, vol. 168(C).
    12. Freitas Gomes, Icaro Silvestre & Perez, Yannick & Suomalainen, Emilia, 2020. "Coupling small batteries and PV generation: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 126(C).
    13. Ansarin, Mohammad & Ghiassi-Farrokhfal, Yashar & Ketter, Wolfgang & Collins, John, 2022. "Economic inefficiencies of pricing distributed generation under novel tariff designs," Applied Energy, Elsevier, vol. 313(C).
    14. Manuel de Villena, Miguel & Jacqmin, Julien & Fonteneau, Raphael & Gautier, Axel & Ernst, Damien, 2021. "Network tariffs and the integration of prosumers: The case of Wallonia," Energy Policy, Elsevier, vol. 150(C).
    15. Fikru, Mahelet G. & Canfield, Casey, 2022. "Demand for renewable energy via green electricity versus solar installation in Community Choice Aggregation," Renewable Energy, Elsevier, vol. 186(C), pages 769-779.
    16. Miguel Manuel de Villena & Raphael Fonteneau & Axel Gautier & Damien Ernst, 2019. "Evaluating the Evolution of Distribution Networks under Different Regulatory Frameworks with Multi-Agent Modelling," Energies, MDPI, vol. 12(7), pages 1-15, March.
    17. Ansarin, Mohammad & Ghiassi-Farrokhfal, Yashar & Ketter, Wolfgang & Collins, John, 2022. "A review of equity in electricity tariffs in the renewable energy era," Renewable and Sustainable Energy Reviews, Elsevier, vol. 161(C).
    18. 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).

    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. Bruno Moreno Rodrigo de Freitas, 2020. "Quantifying the effect of regulated volumetric electriciy tariffs on residential PV adoption under net metering scheme," Working Papers hal-02976874, HAL.
    2. 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).
    3. 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.
    4. Olivier De Groote & Axel Gautier & Frank Verboven, 2020. "The political economic of financing climate policy : evidence from the solar PV subsidy programs," Working Paper Research 389, National Bank of Belgium.
    5. Kiso, Takahiko & Chan, H. Ron & Arino, Yosuke, 2022. "Contrasting effects of electricity prices on retrofit and new-build installations of solar PV: Fukushima as a natural experiment," Journal of Environmental Economics and Management, Elsevier, vol. 115(C).
    6. Boccard, Nicolas & Gautier, Axel, 2021. "Solar rebound: The unintended consequences of subsidies," Energy Economics, Elsevier, vol. 100(C).
    7. Palm, A., 2020. "Early adopters and their motives: Differences between earlier and later adopters of residential solar photovoltaics," Renewable and Sustainable Energy Reviews, Elsevier, vol. 133(C).
    8. 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.
    9. 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).
    10. Sun, Bixuan & Sankar, Ashwini, 2022. "The changing effectiveness of financial incentives: Theory and evidence from residential solar rebate programs in California," Energy Policy, Elsevier, vol. 162(C).
    11. Germeshausen, Robert, 2016. "Effects of Attribute-Based Regulation on Technology Adoption - The Case of Feed-In Tariffs for Solar Photovoltaic," VfS Annual Conference 2016 (Augsburg): Demographic Change 145712, Verein für Socialpolitik / German Economic Association.
    12. Manuel de Villena, Miguel & Jacqmin, Julien & Fonteneau, Raphael & Gautier, Axel & Ernst, Damien, 2021. "Network tariffs and the integration of prosumers: The case of Wallonia," Energy Policy, Elsevier, vol. 150(C).
    13. Best, Rohan & Chareunsy, Andrea, 2022. "The impact of income on household solar panel uptake: Exploring diverse results using Australian data," Energy Economics, Elsevier, vol. 112(C).
    14. Stefan Lamp, 2023. "Sunspots That Matter: The Effect of Weather on Solar Technology Adoption," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(4), pages 1179-1219, April.
    15. Boampong, Richard & Brown, David P., 2020. "On the benefits of behind-the-meter rooftop solar and energy storage: The importance of retail rate design," Energy Economics, Elsevier, vol. 86(C).
    16. Wagner, Johannes, 2018. "Distributed Generation in Unbundled Electricity Markets," EWI Working Papers 2018-1, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    17. Pedro I. Hancevic & Hector H. Sandoval, 2023. "Solar Panel Adoption in SMEs in Emerging Countries," Working Papers 222, Red Nacional de Investigadores en Economía (RedNIE).
    18. Sébastien Houde & Wenjun Wang, 2022. "The Incidence of the U.S.-China Solar Trade War," CER-ETH Economics working paper series 22/372, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    19. 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).
    20. Cambini, Carlo & Soroush, Golnoush, 2019. "Designing grid tariffs in the presence of distributed generation," Utilities Policy, Elsevier, vol. 61(C).

    More about this item

    Keywords

    Renewable energy; Distribution tariffs; Residential PV panels;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

    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:57:y:2020:i:1:d:10.1007_s11149-019-09397-6. 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.