Abstract
This chapter analyzes what constitutes an efficient mix of investment in renewable energy, energy storage, and central grid electricity provision and the consequences of demand-side management. The authors derive the optimal microgrid capacity in terms of solar panels and energy-storage devices depending on whether there are smart meters or not. The chapter studies the consequences for peak-period electricity consumption and explores the conditions for which access to smart meters leads to adverse outcomes by causing more purchases from the grid, and in turn, more electricity provision from power companies. The work also determines the conditions that favor the installation of smart meters and shows that it is not worth installing a smart meter unless it allows users to take advantage of sufficiently low electricity prices.
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