Title

Cost-Reflective Dynamic Electricity Pricing for Prosumers

Abstract

Despite broad interest in dynamic electricity prices, few studies examine their effect on electricity bills and potential price signals for solar adoption. We develop a framework for dynamic prices based on marginal and average cost principles and examine their impact on prosumers' electricity bills. Results reveal that for prosumers the percent of onsite solar consumption determines the relationship between average and marginal costs. Applying the model on a sample of 18 solar houses shows that prosumer monthly bill savings are higher (1) during months of higher onsite solar consumption and (2) when dynamic prices are based on the marginal cost principle.

Department(s)

Economics

Second Department

Engineering Management and Systems Engineering

Keywords and Phrases

Average Cost; Electric Rate Design; Electricity Bill Savings; Marginal Cost; Photovoltaic

International Standard Serial Number (ISSN)

1040-6190

Document Type

Article - Journal

Document Version

Citation

File Type

text

Language(s)

English

Rights

© 2022 Elsevier, All rights reserved.

Publication Date

January-February 2022

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