Least-cost Distribution Network Tariff Design in Theory and Practice

Schittekatte, Tim; Meeus, Leonardo

doi:10.5547/01956574.41.5.tsch

Cited by 31 publications

(18 citation statements)

References 47 publications

(77 reference statements)

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“…A non-cooperative game is proposed in [27], where different tariff structures are evaluated, and their impacts on the electricity users are studied. This work is further developed in [28], where the authors introduce three types of fee to design the distribution tariff: energy, power and fixed; considering prospective, in additional to sunk costs, to set the tariff level. In [9], the design of cost-reflective distribution tariffs is addressed, introducing a model in which users can react to high distribution charges by deploying fix-sized DER installations in order to reduce their electricity bills.…”

Section: Notationmentioning

confidence: 99%

Modelling and assessing the impact of the DSO remuneration strategy on its interaction with electricity users

Villena

Gautier

Ernst

et al. 2021

International Journal of Electrical Power & Energy Systems

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This paper presents a simulation-based methodology for assessing the impact of employing different distribution system operator's remuneration strategies on the economic sustainability of electrical distribution systems. The proposed methodology accounts for the uncertainties posed by the integration of distributed electricity generation resources, and the roll out of smart meters. The different remuneration strategies analysed in this paper include notably new distribution tariffs based on individual peak power consumption and time-dependent rates that are contingent on the time of energy consumption, both requiring smart meters to work. The distributed electricity generation resources are modelled through an optimisation framework and an investment decision process that gradually deploys household photovoltaic installations depending on their profitability and the electricity charges, including the distribution rates. The impact of the distribution system operator's remuneration strategy is measured by an accurate modelling of the remuneration mechanism of this entity, which can adapt to various distribution tariff designs. We analyse this impact over a discrete time horizon. Our methodology is illustrated with several examples of distribution tariffs including old-based on energy consumption or on per-connection fees-as well as new-based on power consumption or time-of use fees-designs. Finally, we provide a comprehensive sensitivity analysis of the proposed simulation environment to the main parameters of the methodology.

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Section: Notationmentioning

confidence: 99%

Modelling and assessing the impact of the DSO remuneration strategy on its interaction with electricity users

Villena

Gautier

Ernst

et al. 2021

International Journal of Electrical Power & Energy Systems

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“…In the electricity sector in particular, it has also been increasingly applied. The model used in this paper is an extended version of that used in Schittekatte and Meeus (2020), which in turn builds on Schittekatte et al (2018). It has the same game-theoretical set-up.…”

Section: Modelling Approachmentioning

confidence: 99%

“…Conversely, a value of 1 means that a consumer demand reduction of 1 kW will reduce the system peak by 1 kW and consequently reduce grid investments. A similar approach to grid cost representation is used in Schittekatte and Meeus (2020). Robert Schuman Centre for Advanced Studies Working Papers…”

Section: Maximisementioning

confidence: 99%

“…There are many academic papers on network tariff design (e.g. Burger et al (2020) and Schittekatte and Meeus (2020)) yet they do not look at the interaction between network tariffs and explicit demand-side flexibility. At the same time, the above-mentioned papers on demand-side flexibility do not include network tariffs in their models, leaving a gap in the literature.…”

Section: Introduction *mentioning

confidence: 99%

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The Economics of Explicit Demand-Side Flexibility in Distribution Grids: The Case of Mandatory Curtailment for a Fixed Level of Compensation

2020

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Demand-side flexibility can be incentivised to reduce the need for investment in distribution grids either implicitly or explicitly. Implicit demand-side flexibility is when prosumers react to price signals triggered by network tariffs. Explicit demand-side flexibility is when the DSO can contract flexibility. In this paper, we focus on one contractual arrangement: mandatory curtailment by the DSO for a fixed level of compensation. We develop a long-term bi-level equilibrium model. The upper level (UL) is a regulated DSO deciding on the network investment and/or curtailing consumers for a fixed level of compensation. The lower level (LL) consists of consumers, which can be prosumers or passive consumers. Prosumers can invest in solar PV and battery systems. They react to the network tariffs and to the compensation provided by the DSO for curtailing them. The regulated DSO anticipates the reaction of the consumers when investing in the network and when setting the level of curtailment. Network tariffs are set to recover the network costs and the payments made to consumers that have been curtailed. We find that the economics of explicit demand-side flexibility in distribution grids are positive, and they are more positive when tariffs are cost-reflective. This implies that we cannot avoid redesigning tariffs by using explicit demand flexibility. We also find that setting an appropriate level of compensation is difficult in the presence of prosumers and passive consumers. A level of compensation that is high enough for passive consumers will be gamed by prosumers.

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“…Several authors used the bi-level set-up to show how consumers react to different types of tariffs, such as fixed, volumetric or capacity-based tariffs, with different levels of locational and spatial granularity. These studies have highlighted the importance of costreflective distribution tariffs to align consumers' interest with the system needs ( (Schittekatte et al, 2018), (Govaerts et al, 2021), (Schittekatte and Meeus, 2020), (Pediaditis et al, 2021), and (Hoarau and Perez, 2019)). The model we developed in our previous paper, Nouicer et al (2021), was the first to include the option for the DSO to curtail demand for a fixed compensation in a bilevel set-up.…”

Section: Introductionmentioning

confidence: 99%