CC BY 4.0 UnportedGambardella, ChristianPahle, MichaelSchill, Wolf-Peter2021-10-262021-10-262020https://oa.tib.eu/renate/handle/123456789/7110https://doi.org/10.34657/6157We analyze the gross welfare gains from real-time retail pricing in electricity markets where carbon taxation induces investment in variable renewable technologies. Applying a stylized numerical electricity market model, we find a U-shaped association between carbon taxation and gross welfare gains. The benefits of introducing real-time pricing can accordingly be relatively low at relatively high carbon taxes and vice versa. The non-monotonous change in welfare gains can be explained by corresponding changes in the inefficiency arising from “under-consumption” during low-price periods rather than by changes in wholesale price volatility. Our results may cast doubt on the efficiency of ongoing roll-outs of advanced meters in many electricity markets, since net benefits might only materialize at relatively high carbon tax levels and renewable supply shares. © 2019, The Author(s).enghttps://creativecommons.org/licenses/by/4.0/333,7330300Carbon taxPartial equilibrium modelingReal-time pricingVariable renewable electricityWelfare analysisArticle