PV adoption: the role of distribution tariffs under net metering

The deployment of decentralized productions units (DPU) like rooftop solar panels is a major challenge for a transition towards greener energy sources. Under a net metering system where the meter runs backward when there is excessive PV production, the electricity produced by a solar panel is valued at the retail price. Higher retail prices thus encourage the deployment of DPU. To identify this relationship, we use data from Wallonia where tariffs are paid on a mostly volumetric base and where there are 13 different tariff zones. Using various specifications, our results suggest that in a municipality where the distribution tariff is one eurocent per kWh higher, the investment in solar PV is, all else equal, around 8% higher