Who Pays for Network Infrastructure? The Catch-22 of Decentralized Energy Technology

This paper explores the equity implications of the adoption of energy storage technology, as a result of the potential defections from the electricity network which it could promote. Our analysis of the social benefits and distributional effects of energy self-consumption shows that it can reduce the revenues of grid operators. Our results lead to the policy recommendation that Governments devising policies aimed at reducing carbon emissions should also consider how to finance the investment in the local and central network infrastructure, in the presence of self-generation, consumption and storage by final consumers.