Optimal Policies to Promote Efficient Distributed Generation of Electricity

47 Pages Posted: 22 Jan 2016

See all articles by David Brown

David Brown

University of Alberta - Department of Economics

Date Written: January 21, 2016

Abstract

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.

Keywords: electricity pricing, distributed generation, regulation

Suggested Citation

Brown, David, Optimal Policies to Promote Efficient Distributed Generation of Electricity (January 21, 2016). USAEE Working Paper No. 16-236, Available at SSRN: https://ssrn.com/abstract=2719920 or http://dx.doi.org/10.2139/ssrn.2719920

David Brown (Contact Author)

University of Alberta - Department of Economics ( email )

8-14 Tory Building
Edmonton, Alberta T6G 2H4
Canada

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