Balancing DSO interests and PV system economics with alternative tariffs

TL;DR

This paper evaluates alternative electricity tariffs to balance DSO interests and PV system economics, finding capacity-based tariffs promote PV and storage adoption but have limited impact on mitigating distribution grid issues.

Contribution

It introduces and assesses five alternative tariffs aimed at recovering grid costs while supporting PV and storage growth, addressing a gap in current tariff structures.

Findings

Capacity-based tariffs encourage PV and storage adoption.

All tariffs have limited effectiveness in mitigating PV impacts.

Tariffs can recover grid costs without significant economic burden.

Abstract

Distributed rooftop photovoltaics (PV) is one of the pillars of the energy transition. However, the massive integration of distributed PV systems challenges the existing grid, with high amounts of PV injection possibly leading to over-voltage and reverse power flow, with line and transformer overloading, among other issues. Moreover, the increase in PV self-consumption and consequently the reduction of imported electricity poses a problem in recovering Transmission System Operators (TSOs) and Distribution System Operators (DSOs) grid costs, that until now have been directly linked to the amount of electricity consumed due to the volumetric nature of traditional tariffs. To investigate whether alternative tariffs could mitigate PV impacts at the distribution level without hampering PV development, we assess five electricity tariffs that could help the DSOs to recover the costs of maintaining the distribution grid. Additionally, we evaluate how such tariffs may affect private investment in storage and their impact on three types of low-voltage networks (i.e., urban, semi-urban, and rural). We found that tariffs with a capacity-based component promote further adoption of PV and storage. At the same time, they allow the DSOs to recover the grid cost without incurring relevant economic differences for the customer. However, all assessed tariffs were found to have a limited role in mitigating PV impacts at the distribution level.