Abstract
As the end-users increasingly can provide flexibility to the power system, it is important to consider how this flexibility can be activated as a resource for the grid. Electricity network tariffs is one option that can be used to activate this flexibility. Therefore, by designing efficient grid tariffs, it might be possible to reduce the total costs in the power system by incentivizing a change in consumption patterns. This paper provides a methodology for optimal grid tariff design under decentralized decision-making and uncertainty in demand, power prices, and renewable generation. A bilevel model is formulated to adequately describe the interaction between the end-users and a distribution system operator. In addition, a centralized decision-making model is provided for benchmarking purposes. The bilevel model is reformulated as a mixed-integer linear problem solvable by branch-and-cut techniques. Results based on both deterministic and stochastic settings are presented and discussed. The findings suggest how electricity grid tariffs should be designed to provide an efficient price signal for reducing aggregate network peaks.
Highlights
1.1 BackgroundThe transition from traditional, inelastic, electricity demand to more flexible consumers, means that the paradigm of demand as a passive load is no longer valid since demand can react to price signals
The overall research question we consider in this paper is: How can we, by using fairly simple network tariffs, incentivize flexible end-users to efficiently adapt their consumption patterns? We address the problems concerning flat tariffs and present a novel approach by formulating the electricity grid tariff design problem with a bilevel structure in the context of prosumers at the end-user level
In the Mathematical program with equilibrium constraints (MPEC)-P and MPEC-PN case, we introduce the possibility of off-peak hours
Summary
The transition from traditional, inelastic, electricity demand to more flexible consumers, means that the paradigm of demand as a passive load is no longer valid since demand can react to price signals. By introducing prosumers, who can both consume and produce electricity, the grid tariffs should provide efficient price signals to align the optimal end-user decisions with efficient utilization of the power system at a larger scale to avoid a sub-optimal outcome as demonstrated in [1]. One principal problem of current grid tariff structures in Europe is that they primarily consist of fixed and volumetric charges. This is, as presented in [4,5,6], not a sufficient proxy for the overall network costs since the main cost driver is the need for sufficient capacity to handle peak loads. Various network tariff structures are optimized subject to the prosumers best response in a game theoretical framework, which is benchmarked against a centralized system optimization
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