Designing retail tariffs to decarbonise the electricity system

Abstract

Increasing recognition that current electricity retail tariffs are ill-adapted to future electricity systems and markets has motivated this paper to examine how retail tariffs need to be reformed to facilitate the energy transition. This paper reviews existing residential retail tariff structures and explores through case studies of Ireland, Italy, and California the implications of retail tariff structure and design for the policy targets of energy efficiency, renewable electricity generation, demand response, in addition to electricity system cost recovery. The research should add empirical insights to the body of academic literature on the subject and be of interest to policy makers wishing to consider retail tariff structures that promote decarbonisation of the electricity system through multiple objectives of improved energy efficiency and increased shares of renewable electricity with future electricity markets.