Driving on Sunbeams: Interactions Between Price Incentives for Electric Vehicles, Residential Solar Photovoltaics and Household Battery Systems*

Abstract

I discuss how electric vehicles (EVs) link transportation externalities to the regulations that govern our electricity markets. Specifically, I contrast the consequences of the incentives faced by joint EV and residential PV adopters under a system of monthly net metering to those under a system of instantaneous metering with feed‐in tariffs and behind‐the‐meter own consumption. I also discuss how, even within Australia, households under new solar PV contracts and early adopters under legacy contracts face very different private costs of operating EVs, which have environmental and congestion implications. I briefly discuss how these incentives interact with the profitability and environmental benefit of household battery systems. Finally, I comment on how these short‐term incentives are likely to evolve in the longer run transition to a much cleaner grid and warn about the potential negative distributional impacts of using purchase subsidies to accelerate the adoption of these technologies.