Conference article

The purpose of this paper is to clarify the effects of a combination of electricity rates; the price of the electricity generated with a photovoltaic (PV) system; and a subsidy when a government aims at achieving a certain level of PV-system adoption. A microeconomic model based on classical demand theory is made. The case is mainly analyzed where the amount of PV-generated electricity is different from household to household while the amounts of electricity consumption and budget as well as utility functions are identical. Other cases are also mentioned. It is shown that a household prefers a higher PV-generated electricity price with a higher electricity rate to a higher subsidy if any one of the following conditions is satisfied with other things being equal: (1) it will have a relatively large amount of PV-generated electricity if it installs; (2) it has a relatively large amount of budget; or (3) it has a relatively small amount of electricity consumption. Furthermore; other things being equal; the difference in utility functions has no effect on the preference. This suggests; though the mixed effects of these conditions are not examined; that a combination optimal for a household does not always optimal for another.

Residential Photovoltaic System; Feed-in tariff; Subsidy