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1. Integrating Distributed Energy Resources: Optimal Prosumer Decisions and Impacts of Net Metering Tariffs

   Alahmed, Ahmed and (June 2022, Energy informatics review)

   S. Keshav (Ed.)

   The rapid growth of the behind-the-meter (BTM) distributed generation has led to initiatives to reform the net energy metering (NEM) policies to address pressing concerns of rising electricity bills, fairness of cost allocation, and the long-term growth of distributed energy resources. This article presents an analytical framework for the optimal prosumer consumption decision using an inclusive NEM X tariff model that covers existing and proposed NEM tariff designs. The structure of the optimal consumption policy lends itself to near closed-form optimal solutions suitable for practical energy management systems that are responsive to stochastic BTM generation and dynamic pricing. The short and long-run performance of NEM and feed-in tariffs (FiT) are considered under a sequential rate-setting decision process. Also presented are numerical results that characterize social welfare distributions, cross-subsidies, and long-run solar adoption performance for selected NEM and FiT policy designs. 

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2. Ambiguities and nonmonotonicities under prosumer power: Optimal distributed energy resource investment in a deregulated electricity industry

   https://doi.org/10.1007/s11750-022-00628-2  

   Siddiqui, Afzal S.; Siddiqui, Sauleh A. (April 2022, TOP)

   Abstract Prosumers adopt distributed energy resources (DER) to cover part of their own consumption and to sell surplus energy. Although individual prosumers are too dispersed to exert operational market power, they may collectively hold a strategic advantage over conventional generation in selecting DER capacity via aggregators. We devise a bilevel model to examine DER capacity sizing by a collective prosumer as a Stackelberg leader in an electricity industry where conventional generation may exert market power in operations. At the upper level, the prosumer chooses DER capacity in anticipation of lower-level operations by conventional generation and DER output. We demonstrate that exertion of market power in operations by conventional generation and the marginal cost of conventional generation affect DER investment by the prosumer in a nonmonotonic manner. Intuitively, in an industry where conventional generation exerts market power in operations similar to a monopoly (MO), the prosumer invests in more DER capacity than under perfectly competitive operations (PC) to take advantage of a high market-clearing price. However, if the marginal cost of conventional generation is high enough, then this intuitive result is reversed as the prosumer adopts more DER capacity under PC than under MO. This is because the high marginal cost of conventional generation prevents the market-clearing price from decreasing, thereby allowing for higher prosumer revenues. Moreover, competition relieves the chokehold on consumption under MO, which further incentivises the prosumer to expand DER capacity to capture market share. We prove the existence of a critical threshold for the marginal cost of conventional generation that leads to this counterintuitive result. Finally, we propose a countervailing regulatory mechanism that yields welfare-enhancing DER investment even in deregulated electricity industries. 

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3. Predicting social tipping and norm change in controlled experiments

   https://doi.org/10.1073/pnas.2014893118  

   Andreoni, James; Nikiforakis, Nikos; Siegenthaler, Simon (April 2021, Proceedings of the National Academy of Sciences)

   null (Ed.)

   The ability to predict when societies will replace one social norm for another can have significant implications for welfare, especially when norms are detrimental. A popular theory poses that the pressure to conform to social norms creates tipping thresholds which, once passed, propel societies toward an alternative state. Predicting when societies will reach a tipping threshold, however, has been a major challenge because of the lack of experimental data for evaluating competing models. We present evidence from a large-scale laboratory experiment designed to test the theoretical predictions of a threshold model for social tipping and norm change. In our setting, societal preferences change gradually, forcing individuals to weigh the benefit from deviating from the norm against the cost from not conforming to the behavior of others. We show that the model correctly predicts in 96% of instances when a society will succeed or fail to abandon a detrimental norm. Strikingly, we observe widespread persistence of detrimental norms even when individuals determine the cost for nonconformity themselves as they set the latter too high. Interventions that facilitate a common understanding of the benefits from change help most societies abandon detrimental norms. We also show that instigators of change tend to be more risk tolerant and to dislike conformity more. Our findings demonstrate the value of threshold models for understanding social tipping in a broad range of social settings and for designing policies to promote welfare. 

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4. Pricing in Prosumer Aggregations using Reinforcement Learning

   https://doi.org/10.1145/3447555.3464853  

   Agwan, Utkarsha; Spangher, Lucas; Arnold, William; Srivastava, Tarang; Poolla, Kameshwar; Spanos, Costas J. (June 2021, e-Energy '21: Proceedings of the Twelfth ACM International Conference on Future Energy Systems)

   Prosumers with generation and storage capabilities can supply en- ergy back to the grid, or trade their surplus with other prosumers for their mutual benefit. A prosumer aggregation that facilitates such trades will price the energy being traded to achieve an objective such as profit maximization, social welfare, or market equilibrium. We propose the use of reinforcement learning to design a trans- active controller to price energy in a prosumer aggregation. This has an advantage over other decentralized pricing mechanisms as it does not rely on iterative price settlement or load estimation by prosumers, and estimates the price in a day ahead manner. We present numerical case studies to evaluate our controller, and dis- cuss extensions to implement this in real prosumer aggregations. 

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5. Some Taxes Are Better Than Others: An Economic Experiment Analyzing Groundwater Management in a Spatially Explicit Aquifer

   https://doi.org/10.1029/2019WR026426  

   Duke, Joshua M.; Liu, Zhongyuan; Suter, Jordan F.; Messer, Kent D.; Michael, Holly A. (July 2020, Water Resources Research)

   Abstract This paper develops a coupled hydrologic‐economic model that estimates the effects of six tax institutions that theory predicts will lead to equal amounts of aquifer withdrawal. That said, the distributive effects of the tax institutions are expected to differ because each involves different combinations of tax thresholds and side payments (returned tax revenue). The tax policies can lead to groundwater users being worse off than they would be using an unmanaged aquifer. This study explores whether the distributive impacts of specific policies that have equal marginal incentives lead to differences in the behavior of participants in an experiment involving a common pool groundwater resource. The results reveal that each of the tax policies results in approximately the same reduction in resource use but affects participants' earnings and opinions regarding the policies differently. A tax imposed on groundwater use above a threshold and without a side payment is most effective in increasing the net social benefit associated with using the aquifer; participant earnings under that scheme are almost equal to earnings from an unmanaged aquifer (1.04% less), and overall social efficiency is greater (4.34%). Unfortunately, participants tend to prefer an unmanaged aquifer and tax policies with high side‐payments—treatments that led to lower overall social efficiency. The evidence suggests that aquifer management may require a two‐fold approach: (1) a carefully selected threshold that can make water users financially indifferent between a managed and unmanaged aquifer and (2) education to increase the political acceptability of the managed aquifer policy. 

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