ctrl+f "missing money" no hits. A lot of this is actually a very well explored problem in electricity markets, particularly at the wholesale level, and part of

ctrl+f "missing money" no hits. A lot of this is actually a very well explored problem in electricity markets, particularly at the wholesale level, and part of why, e.g., capacity markets exist in most deregulated market sin the US (outside of Texas). I know this post is focused on retail, and net metering, but this concept extends pretty broadly across electricity generation and sales. For a little more explanation on the capacity market side of things I'll quote from the Independent Market Monitor for NYISO, ERCOT, MISO, and ISO-NE in a FERC filing from last year (disclaimer, I used to work there)[0]: The purpose of the capacity market is to satisfy resource adequacy requirements. Because an efficient energy-only market would generally sustain a long-term capacity level far below the planning requirements of the Eastern RTOs, additional revenues are needed to sustain capacity levels to satisfy these requirements. The capacity markets, therefore, set prices that reflect the marginal cost of satisfying these planning requirements and provide the “missing money”. This marginal cost or “missing money” in the long-run is equal to the cost of investment minus the operating revenues from the sale of energy, ancillary services, etc. If resources are under-compensated for energy and ancillary services, it will tend to increase the missing money and raise capacity prices. Importantly, if flexible resources are systematically under-compensated, it will inefficiently shift revenues into the capacity market and shift incentives in favor of investment with less flexible characteristics. For this reason, we have repeatedly sought to promote energy and ancillary services market reforms that will reduce the need for out-of-market actions to maintain reliability, which while necessary in the short-term, are particularly harmful to incentives for investment in flexible resources. [0] https://www.potomaceconomics.com/wp-content/uploads/2021/03/FERC-RA-Tech-Conf_PE-Comments_Final-alt-1.pdf https://www.potomaceconomics.com/wp-content/uploads/2021/03/...