Abstract
The adoption of rooftop photovoltaic (PV) systems can create upward pressure on retail electricity rates as utilities are forced to spread their fixed costs of generation and transmission across a smaller customer base. Since high-income households are more likely to purchase PV systems, low-income households may be disproportionately impacted by these rate increases. Using a novel combination of agent-based computational economic modeling and a choice experiment of rooftop solar adoption, we show how this pecuniary externality between low- and high-income customers increases low-income electricity bills by 10% in an area with some of the highest poverty rates in the United States. Since high-income solar adoption is less sensitive to electricity bills than low-income adoption, this pecuniary externality also reduces PV adoption inequity by nearly 1 percentage point. However, the reduction in PV adoption inequity, and the bill savings it generates, are not large enough to offset the $7.8 million ($9.86 per customer) annual increase in low-income electricity bills. Low-income assistance programs will likely fail to fully internalize the pecuniary externality due to horizontal and within-income-group vertical equity concerns.
Recommended Citation
C. Sims et al., "The Equity Implications of Pecuniary Externalities on an Electric Grid," Pnas Nexus, vol. 4, no. 12, article no. pgaf356, Oxford University Press; National Academy of Sciences, Dec 2025.
The definitive version is available at https://doi.org/10.1093/pnasnexus/pgaf356
Department(s)
Civil, Architectural and Environmental Engineering
Publication Status
Open Access
International Standard Serial Number (ISSN)
2752-6542
Document Type
Article - Journal
Document Version
Final Version
File Type
text
Language(s)
English
Rights
© 2025 Oxford University Press; National Academy of Sciences, All rights reserved.
Creative Commons Licensing
This work is licensed under a Creative Commons Attribution 4.0 License.
Publication Date
01 Dec 2025
