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Power from the People: Rooftop Solar and a Downward-Sloping Supply of Electricity

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  • Andrea La Nauze

Abstract

Using high-frequency data, I show that the supply of electricity by solar households can be downward sloping. I document that households receiving higher prices to sell electricity increase their own consumption as their panels produce more, relative to households receiving lower prices. I test several competing explanations and show that a dollar of electricity income increases electricity expenditures by 23 cents, an effect much larger than a standard income response. The fact that solar households treat income from electricity production as “electricity money” means that production subsidies may decrease the supply of electricity by solar homes.

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  • Andrea La Nauze, 2019. "Power from the People: Rooftop Solar and a Downward-Sloping Supply of Electricity," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(6), pages 1135-1168.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/705535
    DOI: 10.1086/705535
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    Cited by:

    1. Qiu, Yueming (Lucy) & Wang, Yi David & Xing, Bo, 2021. "Grid impact of non-residential distributed solar energy and reduced air emissions: Empirical evidence from individual-consumer-level smart meter data," Applied Energy, Elsevier, vol. 290(C).
    2. Wen Lin & David L Ortega & Vincenzina Caputo, 2023. "Experimental quantity, mental budgeting and food choice: a discrete choice experiment application," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(2), pages 457-496.
    3. John List & Ioannis Pragidis & Michael Price, 2024. "Toward an Understanding of the Economics of Prosumers: Evidence from a Natural Field Experiment in Energy," Natural Field Experiments 00791, The Field Experiments Website.
    4. Frondel, Manuel & Kaestner, Kathrin & Sommer, Stephan & Vance, Colin, 2021. "Photovoltaics and the Solar Rebound: Evidence for Germany," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242356, Verein für Socialpolitik / German Economic Association.
    5. Liu, Diyi & Zou, Hongyang & Qiu, Yueming & Du, Huibin, 2024. "Consumer reaction to green subsidy phase-out in China: Evidence from the household photovoltaic industry," Energy Economics, Elsevier, vol. 129(C).
    6. Qiu, Yueming & Kahn, Matthew E. & Xing, Bo, 2019. "Quantifying the rebound effects of residential solar panel adoption," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 310-341.
    7. Ross C. Beppler & Daniel C. Matisoff & Matthew E. Oliver, 2023. "Electricity consumption changes following solar adoption: Testing for a solar rebound," Economic Inquiry, Western Economic Association International, vol. 61(1), pages 58-81, January.
    8. Leslie A. Martin, 2022. "Driving on Sunbeams: Interactions Between Price Incentives for Electric Vehicles, Residential Solar Photovoltaics and Household Battery Systems," Economic Papers, The Economic Society of Australia, vol. 41(4), pages 369-384, December.
    9. Peter M. Schwarz, Nathan Duma, and Ercument Camadan, 2023. "Compensating Solar Prosumers Using Buy-All, Sell-All as an Alternative to Net Metering and Net Purchasing: Total Use, Rebound, and Cross Subsidization," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    10. Yang, Xinyue & Matsumoto, Shigeru, 2023. "To use or not to use, that is the question: Income and substitution effects in the feed-in tariff system for solar-generated electricity," Japan and the World Economy, Elsevier, vol. 68(C).
    11. Frondel, Manuel & Kaestner, Kathrin & Sommer, Stephan & Vance, Colin, 2022. "Photovoltaics and the solar rebound: Evidence for Germany," Ruhr Economic Papers 954, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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