Spillover effects of distribution grid tariffs in the internal electricity market: An argument for harmonization?
Publication typeWorking paper
Publication Number of pages38
MetadataShow full item record
AbstractIn many countries, distribution grid tariffs are being reformed to adapt to the new realities of an electricity system with distributed energy resources. In Europe, legislative proposals have been made to harmonize these reforms across country borders. Many stakeholders have argued that distribution tariffs are a local affair, while the EU institutions argued that there can be spillovers to other countries, which could justify a more harmonized approach. In this paper, we quantify these spillovers with a simplified numerical example to give an order of magnitude. We look at different scenarios, and find that the spillovers can be both negative and positive. We also illustrate that the relative size of the countries is an important driver for the significance of the effects. To be able to quantify these effects, we developed a long-run market equilibrium model that captures the wholesale market effects of distribution grid tariffs. The problem is formulated as a non-cooperative game involving consumers, generating companies and distribution system operators in a stylized electricity market.
KeywordDistribution Grid Tariff Design, Distributed Energy Resources, Non-cooperative Game, Mixed Complementarity Problem, Spillovers
Knowledge Domain/IndustrySpecial Industries : Energy