Network capacity charge for sustainability and energy equity: A model-based analysis

Abstract

It is long known that the afternoon peak demand accounts for over-investment in the electricity network assets. This results in a high price of delivered electricity which does not fairly differentiate between peak and non-peak users. Energy tariff is proven to be one of the best demand-side management (DSM) tools for shaping consumers’ behaviour. While electricity pricing models, such as inclining block and time-of-use tariffs, have received decent attention as successful mechanisms, there are little discussions about another efficient tariff known as a rollover network capacity charge. It is a penalty for the highest recorded power usage over the previous reading cycle (or year) which is introduced to commercial users in some jurisdictions.With recent price reduction in distributed generation and storage (DGS) systems, the interest has increased in devising policies for directing the household and commercial consumers’ behaviour towards using DGS systems in line with DSM objectives. In this paper, we have integrated the rollover network capacity charge into DGS systems investment analysis. The introduced optimisation formulation can consider capacity charge for both energy import and export. The results from a few case studies show the positive impact of capacity charge in directing the peak-consumers’ investment decisions towards DSM tools (e.g., energy storage) to curb their peak demands. This not only improves the resilience of the network but also promises as an effective mechanism in energy-justice nexus by avoiding the transfer of the associated costs of peak demand to all users.