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Willingness to Pay for Solar Panels and Smart Grids

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  • Tunç Durmaz
  • Aude Pommeret
  • Ian Ridley

Abstract

It is expected that the renewable share of energy generation will rise considerably in the near future. The intermittent and uncertain nature of renewable energy (RE) calls for storage and grid management technologies that can allow for increased power system flexibility. To assist policy makers in designing public policies that incentivize RE generation and a flexible power system based on energy storage and demandside management, better knowledge as to the willingness to pay for the corresponding devices is required. In this paper, we appraise the willingness of a household (HH) to pay for a 1.9 kW peak photovoltaic (PV) system and smart grid devices, namely, a smart meter and a home storage battery. Results indicate that having access to a storage device is key for the HH decision to install a smart meter. We also find that it is beneficial for the HH to install the PV system regardless of the pricing scheme and the ownership of the battery pack. It is, nevertheless, barely desirable to install the battery pack regardless of the presence of the PV system; an outcome pointing to the fact that the high cost of storage is a drawback for the wider use of these systems. When storage is constrained in such a way that only the generated power can be stored, the willingness to install the battery pack reduces even further. The investment decisions made when legislation prohibits net-metering are also analyzed.

Suggested Citation

  • Tunç Durmaz & Aude Pommeret & Ian Ridley, 2017. "Willingness to Pay for Solar Panels and Smart Grids," MITP: Mitigation, Innovation and Transformation Pathways 257879, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemmi:257879
    DOI: 10.22004/ag.econ.257879
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    Cited by:

    1. Sai Bravo & Carole Haritchabalet, 2023. "Prosumers: Grid Storage vs Small Fuel-Cell," Working Papers hal-04119625, HAL.
    2. Dato, Prudence & Durmaz, Tunç & Pommeret, Aude, 2020. "Smart grids and renewable electricity generation by households," Energy Economics, Elsevier, vol. 86(C).
    3. Sai Bravo & Carole Haritchabalet, 2023. "Prosumers: Grid Storage vs Small Fuel-Cell," Working papers of Transitions Energétiques et Environnementales (TREE) hal-04119625, HAL.

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    More about this item

    Keywords

    Resource /Energy Economics and Policy;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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