Optimal policies to promote efficient distributed generation of electricity

We analyze the design of policies to promote efficient distributed generation (DG) of electricity. The optimal policy varies with the set of instruments available to the regulator and with the prevailing DG production technology. DG capacity charges often play a valuable role in inducing optimal inv...

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Bibliographic Details
Published in:Journal of regulatory economics 2017-10, Vol.52 (2), p.159-188
Main Authors: Brown, David P., Sappington, David E. M.
Format: Article
Language:English
Subjects:
Economic policy
Economics
Economics and Finance
Electric rates
Electricity generation
Industrial Organization
Intermittent
Microeconomics
Original Article
Payments
Production
Public Finance
Technology
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Summary:We analyze the design of policies to promote efficient distributed generation (DG) of electricity. The optimal policy varies with the set of instruments available to the regulator and with the prevailing DG production technology. DG capacity charges often play a valuable role in inducing optimal investment in DG capacity, allowing payments for DG production to induce the optimal production of electricity using non-intermittent DG technologies. Net metering can be optimal in certain settings, but often is not optimal, especially for non-intermittent DG technologies.
ISSN:0922-680X
1573-0468
DOI:10.1007/s11149-017-9335-9