IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v98y2018icp125-139.html
   My bibliography  Save this article

Steering the adoption of battery storage through electricity tariff design

Author

Listed:
  • Milis, Kevin
  • Peremans, Herbert
  • Van Passel, Steven

Abstract

The economic viability of electricity storage using batteries, under different tariff structures and system configurations, is investigated. The economic outcomes of the different combinations of tariff design and system configuration are evaluated. Based on a discussion of the relevant literature, the following tariff designs are used in the study: (i) fixed energy prices, (ii) real-time energy pricing, (iii) fixed rate capacity tariffs, and (iv) capacity dependent capacity tariffs. Next, the different simulated system configurations are outlined: (i) no battery storage, (ii) battery storage only, and (iii) battery storage and decentralized renewable energy production with PV. Our study provides insights for policy makers, showing that capacity block pricing only incentivises storage as part of an (existing) PV installation, while the combination of real time energy pricing and capacity block pricing promotes a wider adoption of battery storage.

Suggested Citation

  • Milis, Kevin & Peremans, Herbert & Van Passel, Steven, 2018. "Steering the adoption of battery storage through electricity tariff design," Renewable and Sustainable Energy Reviews, Elsevier, vol. 98(C), pages 125-139.
    • Handle: RePEc:eee:rensus:v:98:y:2018:i:c:p:125-139
    DOI: 10.1016/j.rser.2018.09.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364032118306543
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.rser.2018.09.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hirsch, Adam & Parag, Yael & Guerrero, Josep, 2018. "Microgrids: A review of technologies, key drivers, and outstanding issues," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 402-411.
    2. Martin-Martínez, F. & Sánchez-Miralles, A. & Rivier, M., 2016. "A literature review of Microgrids: A functional layer based classification," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 1133-1153.
    3. Aghaei, Jamshid & Alizadeh, Mohammad-Iman, 2013. "Multi-objective self-scheduling of CHP (combined heat and power)-based microgrids considering demand response programs and ESSs (energy storage systems)," Energy, Elsevier, vol. 55(C), pages 1044-1054.
    4. Aneke, Mathew & Wang, Meihong, 2016. "Energy storage technologies and real life applications – A state of the art review," Applied Energy, Elsevier, vol. 179(C), pages 350-377.
    5. Milis, Kevin & Peremans, Herbert & Van Passel, Steven, 2018. "The impact of policy on microgrid economics: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 3111-3119.
    6. Yoldaş, Yeliz & Önen, Ahmet & Muyeen, S.M. & Vasilakos, Athanasios V. & Alan, İrfan, 2017. "Enhancing smart grid with microgrids: Challenges and opportunities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 205-214.
    7. Schreiber, Michael & Wainstein, Martin E. & Hochloff, Patrick & Dargaville, Roger, 2015. "Flexible electricity tariffs: Power and energy price signals designed for a smarter grid," Energy, Elsevier, vol. 93(P2), pages 2568-2581.
    8. Florian Kuhnlenz & Pedro H. J. Nardelli & Santtu Karhinen & Rauli Svento, 2017. "Implementing Flexible Demand: Real-time Price vs. Market Integration," Papers 1709.02667, arXiv.org, revised Feb 2018.
    9. Palizban, Omid & Kauhaniemi, Kimmo & Guerrero, Josep M., 2014. "Microgrids in active network management—Part I: Hierarchical control, energy storage, virtual power plants, and market participation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 36(C), pages 428-439.
    10. Mehleri, E.D. & Sarimveis, H. & Markatos, N.C. & Papageorgiou, L.G., 2013. "Optimal design and operation of distributed energy systems: Application to Greek residential sector," Renewable Energy, Elsevier, vol. 51(C), pages 331-342.
    11. Zafirakis, Dimitrios & Chalvatzis, Konstantinos J. & Baiocchi, Giovanni & Daskalakis, Georgios, 2016. "The value of arbitrage for energy storage: Evidence from European electricity markets," Applied Energy, Elsevier, vol. 184(C), pages 971-986.
    12. Gough, Rebecca & Dickerson, Charles & Rowley, Paul & Walsh, Chris, 2017. "Vehicle-to-grid feasibility: A techno-economic analysis of EV-based energy storage," Applied Energy, Elsevier, vol. 192(C), pages 12-23.
    13. Yu, Nan & Kang, Jin-Su & Chang, Chung-Chuan & Lee, Tai-Yong & Lee, Dong-Yup, 2016. "Robust economic optimization and environmental policy analysis for microgrid planning: An application to Taichung Industrial Park, Taiwan," Energy, Elsevier, vol. 113(C), pages 671-682.
    14. Ringler, Philipp & Keles, Dogan & Fichtner, Wolf, 2016. "Agent-based modelling and simulation of smart electricity grids and markets – A literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 205-215.
    15. Connor, Peter M. & Baker, Philip E. & Xenias, Dimitrios & Balta-Ozkan, Nazmiye & Axon, Colin J. & Cipcigan, Liana, 2014. "Policy and regulation for smart grids in the United Kingdom," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 269-286.
    16. Kühnlenz, Florian & Nardelli, Pedro H.J. & Karhinen, Santtu & Svento, Rauli, 2018. "Implementing flexible demand: Real-time price vs. market integration," Energy, Elsevier, vol. 149(C), pages 550-565.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wenxiao Chu & Francesco Calise & Neven Duić & Poul Alberg Østergaard & Maria Vicidomini & Qiuwang Wang, 2020. "Recent Advances in Technology, Strategy and Application of Sustainable Energy Systems," Energies, MDPI, vol. 13(19), pages 1-29, October.
    2. Iolanda Saviuc & Herbert Peremans & Steven Van Passel & Kevin Milis, 2019. "Economic Performance of Using Batteries in European Residential Microgrids under the Net-Metering Scheme," Energies, MDPI, vol. 12(1), pages 1-28, January.
    3. Tomas Baležentis & Dalia Štreimikienė, 2019. "Sustainability in the Electricity Sector through Advanced Technologies: Energy Mix Transition and Smart Grid Technology in China," Energies, MDPI, vol. 12(6), pages 1-21, March.
    4. Yilmaz, Selin & Xu, Xiaojing & Cabrera, Daniel & Chanez, Cédric & Cuony, Peter & Patel, Martin K., 2020. "Analysis of demand-side response preferences regarding electricity tariffs and direct load control: Key findings from a Swiss survey," Energy, Elsevier, vol. 212(C).
    5. Lai, Chun Sing & Locatelli, Giorgio, 2021. "Economic and financial appraisal of novel large-scale energy storage technologies," Energy, Elsevier, vol. 214(C).
    6. Mukhopadhyay, Bineeta & Das, Debapriya, 2020. "Multi-objective dynamic and static reconfiguration with optimized allocation of PV-DG and battery energy storage system," Renewable and Sustainable Energy Reviews, Elsevier, vol. 124(C).
    7. Heleno, Miguel & Sigrin, Benjamin & Popovich, Natalie & Heeter, Jenny & Jain Figueroa, Anjuli & Reiner, Michael & Reames, Tony, 2022. "Optimizing equity in energy policy interventions: A quantitative decision-support framework for energy justice," Applied Energy, Elsevier, vol. 325(C).
    8. Antweiler, Werner, 2021. "Microeconomic models of electricity storage: Price Forecasting, arbitrage limits, curtailment insurance, and transmission line utilization," Energy Economics, Elsevier, vol. 101(C).
    9. Esplin, Ryan & Nelson, Tim, 2022. "Redirecting solar feed in tariffs to residential battery storage: Would it be worth it?," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 373-389.
    10. Heleno, Miguel & Sehloff, David & Coelho, Antonio & Valenzuela, Alan, 2020. "Probabilistic impact of electricity tariffs on distribution grids considering adoption of solar and storage technologies," Applied Energy, Elsevier, vol. 279(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Milis, Kevin & Peremans, Herbert & Van Passel, Steven, 2018. "The impact of policy on microgrid economics: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 3111-3119.
    2. Wang, Richard & Hsu, Shu-Chien & Zheng, Saina & Chen, Jieh-Haur & Li, Xuran Ivan, 2020. "Renewable energy microgrids: Economic evaluation and decision making for government policies to contribute to affordable and clean energy," Applied Energy, Elsevier, vol. 274(C).
    3. Miguel Carpintero-Rentería & David Santos-Martín & Josep M. Guerrero, 2019. "Microgrids Literature Review through a Layers Structure," Energies, MDPI, vol. 12(22), pages 1-22, November.
    4. Mohseni, Soheil & Brent, Alan C. & Kelly, Scott & Browne, Will N., 2022. "Demand response-integrated investment and operational planning of renewable and sustainable energy systems considering forecast uncertainties: A systematic review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 158(C).
    5. Barra, P.H.A. & Coury, D.V. & Fernandes, R.A.S., 2020. "A survey on adaptive protection of microgrids and distribution systems with distributed generators," Renewable and Sustainable Energy Reviews, Elsevier, vol. 118(C).
    6. Long, Yong & Liu, Xia, 2024. "Optimal green investment strategy for grid-connected microgrid considering the impact of renewable energy source endowment and incentive policy," Energy, Elsevier, vol. 295(C).
    7. Haupt, Leon & Schöpf, Michael & Wederhake, Lars & Weibelzahl, Martin, 2020. "The influence of electric vehicle charging strategies on the sizing of electrical energy storage systems in charging hub microgrids," Applied Energy, Elsevier, vol. 273(C).
    8. Alipour, Manijeh & Zare, Kazem & Seyedi, Heresh & Jalali, Mehdi, 2019. "Real-time price-based demand response model for combined heat and power systems," Energy, Elsevier, vol. 168(C), pages 1119-1127.
    9. Lenhart, Stephanie & Araújo, Kathleen, 2021. "Microgrid decision-making by public power utilities in the United States: A critical assessment of adoption and technological profiles," Renewable and Sustainable Energy Reviews, Elsevier, vol. 139(C).
    10. Nosratabadi, Seyyed Mostafa & Hooshmand, Rahmat-Allah & Gholipour, Eskandar, 2017. "A comprehensive review on microgrid and virtual power plant concepts employed for distributed energy resources scheduling in power systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 341-363.
    11. Norouzi, Farshid & Hoppe, Thomas & Elizondo, Laura Ramirez & Bauer, Pavol, 2022. "A review of socio-technical barriers to Smart Microgrid development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 167(C).
    12. Villanueva-Rosario, Junior Alexis & Santos-García, Félix & Aybar-Mejía, Miguel Euclides & Mendoza-Araya, Patricio & Molina-García, Angel, 2022. "Coordinated ancillary services, market participation and communication of multi-microgrids: A review," Applied Energy, Elsevier, vol. 308(C).
    13. Meyabadi, A. Fattahi & Deihimi, M.H., 2017. "A review of demand-side management: Reconsidering theoretical framework," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 367-379.
    14. Hirsch, Adam & Parag, Yael & Guerrero, Josep, 2018. "Microgrids: A review of technologies, key drivers, and outstanding issues," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 402-411.
    15. Fridgen, Gilbert & Kahlen, Micha & Ketter, Wolfgang & Rieger, Alexander & Thimmel, Markus, 2018. "One rate does not fit all: An empirical analysis of electricity tariffs for residential microgrids," Applied Energy, Elsevier, vol. 210(C), pages 800-814.
    16. Ahmad Khan, Aftab & Naeem, Muhammad & Iqbal, Muhammad & Qaisar, Saad & Anpalagan, Alagan, 2016. "A compendium of optimization objectives, constraints, tools and algorithms for energy management in microgrids," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1664-1683.
    17. Matthew Gough & Sérgio F. Santos & Mohammed Javadi & Rui Castro & João P. S. Catalão, 2020. "Prosumer Flexibility: A Comprehensive State-of-the-Art Review and Scientometric Analysis," Energies, MDPI, vol. 13(11), pages 1-32, May.
    18. Gimelli, A. & Mottola, F. & Muccillo, M. & Proto, D. & Amoresano, A. & Andreotti, A. & Langella, G., 2019. "Optimal configuration of modular cogeneration plants integrated by a battery energy storage system providing peak shaving service," Applied Energy, Elsevier, vol. 242(C), pages 974-993.
    19. Yin, Linfei & Qiu, Yao, 2022. "Long-term price guidance mechanism of flexible energy service providers based on stochastic differential methods," Energy, Elsevier, vol. 238(PB).
    20. Finck, Christian & Li, Rongling & Zeiler, Wim, 2020. "Optimal control of demand flexibility under real-time pricing for heating systems in buildings: A real-life demonstration," Applied Energy, Elsevier, vol. 263(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:rensus:v:98:y:2018:i:c:p:125-139. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.