Energy Expenditure Incidence in the Presence of Prosumers: Can a Fixed Charge Lead Us to the Promised Land?

Distributed renewable resources owned by prosumers have been viewed as an effective way of fortifying grid resilience and enhancing sustainability. However, prosumers serve their own interests, and their objective is unlikely to align with that of society. Their growing presence in the market may negatively affect less affluent consumers who are financially unable to adopt new technologies. We compare the energy expenditure incidence among different income groups when prosumers are subject to a net-metering and a net-billing policy considering both the wholesale and retail markets. We demonstrate that policies exclusively based on volumetric consumption for recovering fixed costs are likely to favor the affluent income group. Among the two policies, net-metering is more regressive than net-billing under the volumetric tariff when prosumers are selling power into the grid. A hybrid policy, which also features an income-based fixed charge and an annual (re)connection fee or a grid access fee on prosumers, may potentially improve energy equity by leveling the energy expenditure incidence. Due to its revenue certainty, such policy is also more acceptable by and appealing to the utilities; however, it may reduce the incentive for conserving energy.