A mutually beneficial approach to electricity network pricing in the presence of large amounts of solar power and community-scale energy storage

Abstract

Electricity distribution networks that contain large photovoltaic solar systems can experience power flows between customers. These may create both technical and socio-economic challenges. This paper establishes how these challenges can be addressed through the combined deployment of Community-scale Energy Storage (CES) and local network tariffs. Our study simulates the operation of a CES under a range of local network tariff models, using current Australian electricity prices and current network prices as a reference. We assess the financial outcomes for solar and non-solar owning customers and the distribution network operator. We find that tariff settings exist that create mutual benefits for all stakeholders. Such tariffs all apply a discount of greater than 50% to energy flows within the local network, relative to regular distribution network tariffs. The policy implication of these findings is that the, historically contentious, issue of network tariff reform in the presence of local solar power generation can be resolved with a mutually beneficial arrangement of local network tariffs and CES. Furthermore, the challenge of setting appropriate tariffs is eased through clear and intuitive conditions on local network tariff pricing.