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11/12/2025 | Press release | Distributed by Public on 11/12/2025 09:33
How Do Residential Greenhouse Gas Mitigation Technologies Affect Electricity Prices and Consumer Welfare
How Do Residential Greenhouse Gas Mitigation Technologies Affect Electricity Prices and Consumer Welfare?
This paper evaluates the effects of such renewable technology adoption on average residential electricity prices as well as the impacts of those price changes for the private welfare of nonadopters.
Date
Nov. 12, 2025
Authors
Zeyang Dong, Jing Liang, Joshua Linn, and Yueming Qiu
Publication
Working PaperReading time
1 minuteAbstract
Many jurisdictions encourage households to adopt technologies that reduce greenhouse gas emissions and energy consumption, but there is little evidence on how these technologies affect the welfare of nonadopting households. We show that, in theory, adopting climate-friendly technologies that affect aggregate electricity demand, such as rooftop solar photovoltaics or electric vehicles, can increase or decrease average retail electricity prices in the short run; if the variable cost curve for electricity generation is sufficiently flat, higher demand reduces prices (and vice versa). Analysis of US residential electricity price and consumption data, as well as simulations of a computational electricity generation model, suggests that this variable cost condition holds. Adopting technologies that reduce consumption raises average retail prices, harming nonadopters; adopting technologies that increase electricity demand reduces average electricity prices, benefiting nonadopters. Using household survey data, we find that adopting rooftop solar disproportionately harms low-income nonadopting households, whereas adopting electric vehicles disproportionately benefits them. This progressivity roughly offsets the regressivity of the electric vehicle subsidy transfers.
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PDF - 5.4 MB
Topics
- Electric Power
- Energy Efficiency and Demand-Side Management
- Electricity Markets
Topics
- Electric Power
- Energy Efficiency and Demand-Side Management
- Electricity Markets
Authors
Zeyang Dong
Graduate Student at the University of Maryland
Jing Liang
Postdoctoral Research Associate at Princeton University
Joshua Linn
Senior Fellow
Josh Linn is a senior fellow at RFF. His research centers on the effects of environmental policies and economic incentives for new technologies in the transportation, electricity, and industrial sectors.
Yueming Qiu
Professor and Associate Dean for Research and Faculty Affairs in the School of Public Policy at the University of Maryland
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