Grid Tariffs Based on Capacity Subscription: Multi Year Analysis on Metered Consumer Data

TL;DR

This study analyzes capacity subscription grid tariffs using six years of consumer data, showing their potential to improve cost reflectivity and reduce cross-subsidization amid increasing electrification.

Contribution

It provides a multi-year analysis of capacity-based tariffs, comparing static and dynamic approaches, and offers insights into optimal subscription levels for different consumer demand profiles.

Findings

Annual costs are stable for most consumers.

Stochastic methods are recommended for physical demand limitations.

Capacity tariffs can enhance cost reflectivity and fairness.

Abstract

While volume-based grid tariffs have been the norm for residential consumers, capacity-based tariffs will become more relevant with the increasing electrification of society. A further development is capacity subscription, where consumers are financially penalised for exceeding their subscribed capacity, or alternatively their demand is limited to the subscribed level. The penalty or limitation can either be static (always active) or dynamic, meaning that it is only activated when there are active grid constraints. We investigate the cost impact for static and dynamic capacity subscription tariffs, for 84 consumers based on six years of historical load data. We use several approaches for finding the optimal subscription level ex ante. The results show that annual costs remain both stable and similar for most consumers, with a few exceptions for those that have high peak demand. In the case of a physical limitation, it is important to use a stochastic approach for the optimal subscription level to avoid excessive demand limitations. Facing increased peak loads due to electrification, regulators should consider a move to capacity-based tariffs in order to reduce cross-subsidisation between consumers and increase cost reflectivity without impacting the DSO cost recovery.