Power From the People: Rooftop Solar and a Downward-Sloping Supply of Electricity

42 Pages Posted: 9 Aug 2018

See all articles by Andrea La Nauze

Andrea La Nauze

University of Pittsburgh - Department of Economics

Date Written: July 24, 2018

Abstract

Using high-frequency data, I show that the supply of electricity by solar households can be downward-sloping. I document that households receiving higher prices to sell electricity increase their own consumption as their panels produce more, relative to households receiving lower prices. I test several competing explanations and show that a dollar of electricity income increases electricity expenditures by 23 cents, an effect much larger than a standard income response. The fact that solar households treat income from electricity production as "electricity money" means that production subsidies may decrease the supply of electricity by solar homes.

Keywords: Rooftop Solar, Fungibility, Mental Accounting, Distributed Generation

JEL Classification: D12, Q41, Q42

Suggested Citation

La Nauze, Andrea, Power From the People: Rooftop Solar and a Downward-Sloping Supply of Electricity (July 24, 2018). Available at SSRN: https://ssrn.com/abstract=3219782 or http://dx.doi.org/10.2139/ssrn.3219782

Andrea La Nauze (Contact Author)

University of Pittsburgh - Department of Economics ( email )

4901 Wesley Posvar Hall
230 South Bouquet Street
Pittsburgh
United States

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