Journal of Regulatory Economics

, Volume 52, Issue 2, pp 159–188 | Cite as

Optimal policies to promote efficient distributed generation of electricity

  • David P. BrownEmail author
  • David E. M. Sappington
Original Article


We analyze the design of policies to promote efficient distributed generation (DG) of electricity. The optimal policy varies with the set of instruments available to the regulator and with the prevailing DG production technology. DG capacity charges often play a valuable role in inducing optimal investment in DG capacity, allowing payments for DG production to induce the optimal production of electricity using non-intermittent DG technologies. Net metering can be optimal in certain settings, but often is not optimal, especially for non-intermittent DG technologies.


Electricity pricing Distributed generation Regulation 

JEL Classification

L51 L94 



Support from the Government of Canada’s Canada First Research Excellence Fund under the Future Energy Systems Research Initiative is gratefully acknowledged.


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Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of AlbertaEdmontonCanada
  2. 2.Department of EconomicsUniversity of FloridaGainesvilleUSA

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