  Recent years have shown a rapid adoption of residential solar PV with
increased self-consumption and self-sufficiency levels in Europe. A major
driver for their economic viability is the electricity tax exemption for the
consumption of self-produced electricity. This leads to large residential PV
capacities and partially overburdened distribution grids. Furthermore, the tax
exemption that benefits wealthy households that can afford capital-intense
investments in solar panels in particular has sparked discussions about energy
equity and the appropriate taxation level for self-consumption. This study
investigates the implementation of uniform electricity taxes on all
consumption, irrespective of the origin of the production, by means of a case
study of 155,000 hypothetical Danish prosumers. The results show that the new
taxation policy redistributes costs progressively across household sizes. As
more consumption is taxed, the tax level can be reduced by 38%, leading to 61%
of all households seeing net savings of up to 23% off their yearly tax bill.
High-occupancy houses save an average of 116 Euro per year at the expense of
single households living in large dwellings who pay 55 Euro per year more.
Implementing a uniform electricity tax in combination with a reduced overall
tax level can (a) maintain overall tax revenues and (b) increase the
interaction of batteries with the grid at the expense of behind-the-meter
operations. In the end, the implicit cross-subsidy is removed by taxing
self-consumption uniformly, leading to a cost redistribution supporting
occupant-dense households and encouraging the flexible behavior of prosumers.
This policy measure improves economic efficiency and greater use of technology
with positive system-wide impacts.
