Smart grids and renewable electricity generation by households

Abstract

This paper analyzes investments in solar panels and energy storage at a household (HH) level and studies the consequences of demand-side management for a HH by accounting for three levels of equipment in smart grids. The first level refers to the possibility of feeding electricity to the grid, which can be achieved relatively simply by net metering. The second level concerns the installation of smart meters. The third level relates to energy storage. Additionally, we look at the welfare impact of a policy imposing the installation of smart meters and the implications of curtailment measures to avoid congestion. Our analysis conveys core messages for the policymakers by showing that smart meter deployment can be welfare worsening and lead to higher grid electricity purchase depending on the tariffs. In turn, greenhouse gas emissions can be higher if fossil fuels hold a significant share in grid electricity production. This calls for regulation of tariff rates. (C) 2019 Elsevier B.V. All rights reserved.