How feed-in remuneration design shapes residential PV prosumer paradigms

Abstract

As part of their clean technology and decarbonization strategies, numerous countries have introduced feed-in remuneration (FiR) schemes to spur the deployment of solar photovoltaics (PV). However, in the light of rising retail electricity prices and falling costs for rooftop solar installations in recent years, policy makers and regulators face the difficult task of deciding when and how these schemes should be amended or phased out. To understand how such actions might shape the role of residential solar and the resulting economics in a changing electricity system, we study how the design of FiR schemes affects optimal PV system sizes. To illustrate our approach, we draw on empirical data on the FiR policies of Net Metering and Feed-in Tariffs from California and Germany between 2005 and 2016. Using a techno-economic model and a conceptual framework, we show that FiR design and its interplay with retail electricity prices and PV system costs jointly determine whether residential PV installations are economic, how they are sized, and which prosumer paradigms they spur. Our analysis holds numerous implications for policy makers and advisors responsible for redesigning or adapting existing FiR mechanisms, as well as for the stakeholders of an emerging ecosystem based on residential solar PV.