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Integrating Distributed Energy Resources: Optimal Prosumer Decisions and Impacts of Net Metering Tariffs

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  • Ahmed S. Alahmed
  • Lang Tong

Abstract

The rapid growth of the behind-the-meter (BTM) distributed generation has led to initiatives to reform the net energy metering (NEM) policies to address pressing concerns of rising electricity bills, fairness of cost allocation, and the long-term growth of distributed energy resources. This article presents an analytical framework for the optimal prosumer consumption decision using an inclusive NEM X tariff model that covers existing and proposed NEM tariff designs. The structure of the optimal consumption policy lends itself to near closed-form optimal solutions suitable for practical energy management systems that are responsive to stochastic BTM generation and dynamic pricing. The short and long-run performance of NEM and feed-in tariffs (FiT) are considered under a sequential rate-setting decision process. Also presented are numerical results that characterize social welfare distributions, cross-subsidies, and long-run solar adoption performance for selected NEM and FiT policy designs.

Suggested Citation

  • 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.
    • Handle: RePEc:arx:papers:2204.06115
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    References listed on IDEAS

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    Cited by:

    1. Nathan Engelman Lado & Ahmed Alahmed & Audun Botterud & Saurabh Amin, 2026. "Optimal Solar Investment and Operation under Asymmetric Net Metering," Papers 2602.02284, arXiv.org, revised Feb 2026.
    2. Ahmed S. Alahmed & Lang Tong, 2022. "Achieving Social Optimality for Energy Communities via Dynamic NEM Pricing," Papers 2211.09360, arXiv.org.
    3. Ahmed S. Alahmed & Lang Tong, 2023. "Resource Sharing in Energy Communities: A Cooperative Game Approach," Papers 2311.18792, arXiv.org.
    4. Ahmed S. Alahmed & Guido Cavraro & Andrey Bernstein & Lang Tong, 2023. "Operating-Envelopes-Aware Decentralized Welfare Maximization for Energy Communities," Papers 2310.07157, arXiv.org.

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