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ID:
176793
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| Summary/Abstract |
The accessibility and reducing cost of distributed renewable energy sources are stimulating the emergence of small-scale residential prosumers who can produce and consume electricity. This may lead to various scenarios. Such prosumers may increase the uncertainty of consumption behavior, reduce consumption from the grid, and eventually disconnect from the grid. However, they may remain connected, and their energy potential can provide flexibility for the overall system. Current policy in some jurisdictions promotes disconnection through tax increases, grid charges, and other non-commodity costs. In particular, in Ontario (Canada) only 8.7% of the typical electricity bill covers the cost of energy and power; the remainder subsidizes governmental energy-procurement contracts, compensates the grid, pays for environmental initiatives, and covers other taxes. The situation is aggravated by a lack of a global vision for the energy system and of coordinated actions to achieve this vision. We support the preferred scenario in which prosumers remain connected to the grid. As an alternative to Ontario's current attempts to artificially slow the increase in electricity prices, we present an extended critical survey of energy policies to motivate a thoughtful reconsideration of current schemes for the economic integration of prosumers in the energy system.
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| 2 |
ID:
179703
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| Summary/Abstract |
The clean energy transition has long been framed in terms of its technological and economic feasibility. An increasingly salient constraint lies in its political feasibility. The transition requires vigorous public support to be completed. Yet increased consumer costs associated with the deployment of renewable electricity could make voters - and, by extension, governments - less supportive of it. As a result, overly aggressive government support for renewables could lead to its own downfall. To examine this threat, I document two stylized facts. First, the expansion of renewable electricity capacity has been followed by an increase in household electricity bills, and this has mostly happened because of energy-specific taxes. An increase of renewable electricity capacity by one within-country standard deviation raises a typical household's bill by €5.7 per MWh (95% CI: [3, 8.3]), most of which comes from an increase in non-VAT taxes (+€3.8/MWh [2.6; 5.1]). Second, these taxes have hurt popular support for aggressive renewable energy policy. An increase of non-VAT taxes by one standard deviation increases the share of people who find renewable energy too ambitious by 0.7 percentage points (95% CI: [0.1; 1.3]). Climbing costs could therefore undermine further political support toward renewable electricity deployment and threaten its contribution to greenhouse gas reductions.
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