Key points are not available for this paper at this time.
This paper presents a comprehensive analysis of the insurance effect associated with distributed energy resources (DERs) within the context of system reliability.Drawing from the field of energy economics, we investigate the relationship between the failure risk of DER systems and the investment decisions made by consumers.By developing the certainty equivalent based on expected utility, we consider the choices made by both risk-neutral and risk-averse individuals.Our findings highlight the significance of risk aversion and system reliability in determining optimal investment levels in renewable DERs.This research contributes to the understanding of factors influencing investment behavior in DERs systems, offering valuable insights for policymakers and energy practitioners seeking to promote sustainable energy transitions.
Lee et al. (Wed,) studied this question.