Elsevier

Energy Policy

Volume 152, May 2021, 112168
Energy Policy

Prosumage of solar electricity: Tariff design, capacity investments, and power sector effects

https://doi.org/10.1016/j.enpol.2021.112168Get rights and content
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open access

Highlights

  • Decentralized self-generation of PV electricity with battery storage gains relevance.

  • We analyze how tariff design impacts prosumage incentives of households.

  • We develop an open-source electricity sector model featuring prosumage agents.

  • In German 2030 scenarios, lower feed-in tariffs reduce PV investments, but battery sizing is rather robust.

  • Higher fixed parts of retail tariffs lower self-generation and contribute to power sector non-energy costs.

Abstract

We analyze how tariff design incentivizes households to invest in residential photovoltaic and battery storage systems, and explore selected electricity sector effects. To this end, we develop an open-source electricity sector model that explicitly features prosumage agents and apply it to German 2030 scenarios. Results show that lower feed-in tariffs substantially reduce investments in residential photovoltaics, yet optimal battery sizing and self-generation are relatively robust. With increasing fixed parts of retail tariffs and, accordingly, lower volumetric retail rates for grid consumption, households have lower incentives for self-consumption. As a consequence, optimal battery capacities and self-generation are smaller, and households contribute more to non-energy power sector costs. A cap on hourly feed-in by households may relieve distribution grid stress without compromising PV expansion or prosumage models for households. When choosing tariff designs, policy makers should not aim to (dis-)incentivize prosumage as such, but balance effects on renewable capacity expansion and system cost contribution.

Keywords

Prosumage
Retail tariff
Feed-in tariff
Photovoltaics
Battery storage
Renewable energy

JEL classification

C61
Q41
Q42

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