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Optimal Policies to Promote Efficient Distributed Generation of Electricity

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  • Brown, David P.

    (University of Alberta, Department of Economics)

  • Sappington, David E. M.

    (University of Florida)

Abstract

We analyze the design of policies to promote efficient distributed generation (DG) of electricity. The optimal policy varies with the set of instruments available to the regulator and with the prevailing DG production technology. DG capacity charges often play a valuable role in inducing optimal investment in DG capacity, allowing payments for DG production to induce the optimal production of electricity using non-intermittent DG technologies. Net metering can be optimal in certain settings, but often is not optimal, especially for non-intermittent DG technologies.

Suggested Citation

  • Brown, David P. & Sappington, David E. M., 2016. "Optimal Policies to Promote Efficient Distributed Generation of Electricity," Working Papers 2016-1, University of Alberta, Department of Economics.
    • Handle: RePEc:ris:albaec:2016_001
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    References listed on IDEAS

    as
    1. David P. Brown & David E. M. Sappington, 2016. "On the optimal design of demand response policies," Journal of Regulatory Economics, Springer, vol. 49(3), pages 265-291, June.
    2. 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.
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    Cited by:

    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. 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. Spiller, Elisheba & Esparza, Ricardo & Mohlin, Kristina & Tapia-Ahumada, Karen & Ünel, Burçin, 2023. "The role of electricity tariff design in distributed energy resource deployment," Energy Economics, Elsevier, vol. 120(C).
    4. Wangsness, Paal Brevik & Proost, Stef & Rødseth, Kenneth Løvold, 2021. "Optimal policies for electromobility: Joint assessment of transport and electricity distribution costs in Norway," Utilities Policy, Elsevier, vol. 72(C).
    5. Robert Clark & Mario Samano, 2022. "Incentivized Mergers and Cost Efficiency: Evidence from the Electricity Distribution Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 70(4), pages 791-837, December.
    6. 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).
    7. Cambini, Carlo & Soroush, Golnoush, 2019. "Designing grid tariffs in the presence of distributed generation," Utilities Policy, Elsevier, vol. 61(C).
    8. Georgi N. Todorov & Andrey I. Vlasov & Elena E. Volkova & Marina A. Osintseva, 2020. "Sustainability in Local Power Supply Systems of Production Facilities Where There Is the Compensatory Use of Renewable Energy Sources," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 14-23.
    9. Wagner, Johannes, 2018. "Distributed Generation in Unbundled Electricity Markets," EWI Working Papers 2018-1, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    10. Michas, Serafeim & Stavrakas, Vassilis & Papadelis, Sotiris & Flamos, Alexandros, 2020. "A transdisciplinary modeling framework for the participatory design of dynamic adaptive policy pathways," Energy Policy, Elsevier, vol. 139(C).
    11. 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).
    12. 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.

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    More about this item

    Keywords

    electricity pricing; distributed generation; regulation;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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