Who should pay to support renewable electricity? Exploring regressive impacts, energy poverty and tariff equity

Abstract

Even if the cost of producing electricity from non-conventional renewable resources has significantly decreased during the last decades, the cost of supporting these technologies is expected to grow worldwide until 2035. If these costs keep on being recovered through surcharges in electricity tariffs that are proportional to consumption, they will have a strong regressive impact that may intensify energy poverty issues. This short article analyses this regressive effect and presents some alternative methodologies to allocate renewable support costs within the society, promoting a just energy transition.

Even if the cost of producing electricity from non-conventional renewable resources has significantly decreased during the last decades, the cost of supporting these technologies is expected to grow worldwide until 2035. If these costs keep on being recovered through surcharges in electricity tariffs that are proportional to consumption, they will have a strong regressive impact that may intensify energy poverty issues. This short article analyses this regressive effect and presents some alternative methodologies to allocate renewable support costs within the society, promoting a just energy transition.