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.
Recommended Citation
Fikru, M. G., Atherton, J., & Canfield, C. I. (2022). Cost-Reflective Dynamic Electricity Pricing for Prosumers. Electricity Journal, 35(1) Elsevier.
The definitive version is available at https://doi.org/10.1016/j.tej.2022.107075
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
