A Generic Economic Framework for Electric Rate Design with Prosumers
Location-varying electric rates may incentivize distributed energy resources (DERs) with lower system costs. However, the distributional impact among prosumers versus traditional consumers is not clear. This study presents a generic economic framework for evaluating novel rate designs. The study derives conditions under which large solar systems impose a higher marginal cost on the grid and examines the implication of different rate designs for cross-subsidy. Our findings suggest that location-varying rates remove all cross-subsidy effects except in the case where returns to scale in electricity production are low. In addition, location-varying rates lower the electricity bill of prosumers and consumers. Location-varying rates may better incentivize DER adoption in locations that minimize system-level costs.
Fikru, M., & Canfield, C. I. (2020). A Generic Economic Framework for Electric Rate Design with Prosumers. Solar Energy, 211, pp. 1325-1334. International Solar Energy Society.
The definitive version is available at https://doi.org/10.1016/j.solener.2020.10.014
Engineering Management and Systems Engineering
Center for Research in Energy and Environment (CREE)
Keywords and Phrases
Rate design; Location-varying rates; Distributed energy resources; Photovoltaics; Cross-subsidy; Prosumers
International Standard Serial Number (ISSN)
Article - Journal
© 2020 International Solar Energy Society, All rights reserved.
15 Nov 2020