IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v15y2022i17p6209-d898223.html
   My bibliography  Save this article

On the Importance of Grid Tariff Designs in Local Energy Markets

Author

Listed:
  • Sebastian Schreck

    (Siemens AG, Technology, Günther-Scharowsky-Str. 1, 91058 Erlangen, Germany
    Department of Electrical Engineering and Computer Science, Technical University of Darmstadt, Landgraf-Georg-Str. 4, 64283 Darmstadt, Germany)

  • Robin Sudhoff

    (Siemens AG, Technology, Günther-Scharowsky-Str. 1, 91058 Erlangen, Germany
    Department of Electrical Engineering and Computer Science, Technical University of Darmstadt, Landgraf-Georg-Str. 4, 64283 Darmstadt, Germany)

  • Sebastian Thiem

    (Siemens AG, Technology, Günther-Scharowsky-Str. 1, 91058 Erlangen, Germany)

  • Stefan Niessen

    (Siemens AG, Technology, Günther-Scharowsky-Str. 1, 91058 Erlangen, Germany
    Department of Electrical Engineering and Computer Science, Technical University of Darmstadt, Landgraf-Georg-Str. 4, 64283 Darmstadt, Germany)

Abstract

Local Energy Markets (LEMs) were recently proposed as a measure to coordinate an increasing amount of distributed energy resources on a distribution grid level. A variety of market models for LEMs are currently being discussed; however, a consistent analysis of various proposed grid tariff designs is missing. We address this gap by formulating a linear optimization-based market matching algorithm capable of modeling a variation of grid tariff designs. A comprehensive simulative study is performed for yearly simulations of a rural, semiurban, and urban grids in Germany, focusing on electric vehicles, heat pumps, battery storage, and photovoltaics in residential and commercial buildings. We compare energy-based grid tariffs with constant, topology-dependent and time-variable cost components and power-based tariffs to a benchmark case. The results show that grid tariffs with power fees show a significantly higher potential for the reduction of peak demand and feed-in (30–64%) than energy fee-based tariffs (8–49%). Additionally, we show that energy-based grid tariffs do not value the flexibility of assets such as electric vehicles compared to inflexible loads. A postprocessing of market results valuing the reduction of power peaks is proposed, enabling a compensation for the usage of asset flexibility.

Suggested Citation

  • Sebastian Schreck & Robin Sudhoff & Sebastian Thiem & Stefan Niessen, 2022. "On the Importance of Grid Tariff Designs in Local Energy Markets," Energies, MDPI, vol. 15(17), pages 1-25, August.
    • Handle: RePEc:gam:jeners:v:15:y:2022:i:17:p:6209-:d:898223
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/15/17/6209/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/15/17/6209/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yael Parag & Benjamin K. Sovacool, 2016. "Electricity market design for the prosumer era," Nature Energy, Nature, vol. 1(4), pages 1-6, April.
    2. Steffen Meinecke & Džanan Sarajlić & Simon Ruben Drauz & Annika Klettke & Lars-Peter Lauven & Christian Rehtanz & Albert Moser & Martin Braun, 2020. "SimBench—A Benchmark Dataset of Electric Power Systems to Compare Innovative Solutions Based on Power Flow Analysis," Energies, MDPI, vol. 13(12), pages 1-19, June.
    3. El-Baz, Wessam & Tzscheutschler, Peter & Wagner, Ulrich, 2019. "Integration of energy markets in microgrids: A double-sided auction with device-oriented bidding strategies," Applied Energy, Elsevier, vol. 241(C), pages 625-639.
    4. Bernd Thormann & Thomas Kienberger, 2020. "Evaluation of Grid Capacities for Integrating Future E-Mobility and Heat Pumps into Low-Voltage Grids," Energies, MDPI, vol. 13(19), pages 1-30, September.
    5. Bjarghov, Sigurd & Farahmand, Hossein & Doorman, Gerard, 2022. "Capacity subscription grid tariff efficiency and the impact of uncertainty on the subscribed level," Energy Policy, Elsevier, vol. 165(C).
    6. Jerzy Andruszkiewicz & Józef Lorenc & Agnieszka Weychan, 2019. "Demand Price Elasticity of Residential Electricity Consumers with Zonal Tariff Settlement Based on Their Load Profiles," Energies, MDPI, vol. 12(22), pages 1-22, November.
    7. Cramer, Wilhelm & Schumann, Klemens & Andres, Michael & Vertgewall, Chris & Monti, Antonello & Schreck, Sebastian & Metzger, Michael & Jessenberger, Stefan & Klaus, Joachim & Brunner, Christoph & Heri, 2021. "A simulative framework for a multi-regional assessment of local energy markets – A case of large-scale electric vehicle deployment in Germany," Applied Energy, Elsevier, vol. 299(C).
    8. Bertsch, Valentin & Geldermann, Jutta & Lühn, Tobias, 2017. "What drives the profitability of household PV investments, self-consumption and self-sufficiency?," Applied Energy, Elsevier, vol. 204(C), pages 1-15.
    9. Lin, Boqiang & Chen, Jiaying & Wesseh, Presley K., 2022. "Peak-valley tariffs and solar prosumers: Why renewable energy policies should target local electricity markets," Energy Policy, Elsevier, vol. 165(C).
    10. Li, Kun & Cursio, Joseph D. & Jiang, Mengfei & Liang, Xi, 2019. "The significance of calendar effects in the electricity market," Applied Energy, Elsevier, vol. 235(C), pages 487-494.
    11. Eid, Cherrelle & Koliou, Elta & Valles, Mercedes & Reneses, Javier & Hakvoort, Rudi, 2016. "Time-based pricing and electricity demand response: Existing barriers and next steps," Utilities Policy, Elsevier, vol. 40(C), pages 15-25.
    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. Gjorgievski, Vladimir Z. & Velkovski, Bodan & Francesco Demetrio, Minuto & Cundeva, Snezana & Markovska, Natasa, 2023. "Energy sharing in European renewable energy communities: Impact of regulated charges," Energy, Elsevier, vol. 281(C).
    2. Maciej Sołtysik & Karolina Mucha-Kuś & Jacek Kamiński, 2022. "The New Model of Energy Cluster Management and Functioning," Energies, MDPI, vol. 15(18), pages 1-18, September.
    3. Pena-Bello, Alejandro & Junod, Robin & Ballif, Christophe & Wyrsch, Nicolas, 2023. "Balancing DSO interests and PV system economics with alternative tariffs," Energy Policy, Elsevier, vol. 183(C).
    4. Yannick Pohlmann & Carl-Friedrich Klinck, 2023. "Techno-Economic Potential of V2B in a Neighborhood, Considering Tariff Models and Battery Cycle Limits," Energies, MDPI, vol. 16(11), pages 1-24, May.
    5. Barbara Siuta-Tokarska & Sylwia Kruk & Paweł Krzemiński & Agnieszka Thier & Katarzyna Żmija, 2022. "Digitalisation of Enterprises in the Energy Sector: Drivers—Business Models—Prospective Directions of Changes," Energies, MDPI, vol. 15(23), pages 1-21, November.

    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. Robin Sudhoff & Sebastian Schreck & Sebastian Thiem & Stefan Niessen, 2022. "Operating Renewable Energy Communities to Reduce Power Peaks in the Distribution Grid: An Analysis on Grid-Friendliness, Different Shares of Participants, and Economic Benefits," Energies, MDPI, vol. 15(15), pages 1-18, July.
    2. 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.
    3. Stute, Judith & Klobasa, Marian, 2024. "How do dynamic electricity tariffs and different grid charge designs interact? - Implications for residential consumers and grid reinforcement requirements," Energy Policy, Elsevier, vol. 189(C).
    4. Li, Na & Hakvoort, Rudi A. & Lukszo, Zofia, 2021. "Cost allocation in integrated community energy systems - A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 144(C).
    5. Rodrigues, Stefane Dias & Garcia, Vinicius Jacques, 2023. "Transactive energy in microgrid communities: A systematic review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 171(C).
    6. Chen, Ting & Vandendriessche, Frederik, 2023. "Evolution of the EU legal framework for promoting RES-E: A market compatible paradigm shift?," Utilities Policy, Elsevier, vol. 83(C).
    7. O'Shaughnessy, Eric & Cutler, Dylan & Ardani, Kristen & Margolis, Robert, 2018. "Solar plus: A review of the end-user economics of solar PV integration with storage and load control in residential buildings," Applied Energy, Elsevier, vol. 228(C), pages 2165-2175.
    8. Yamamoto, Yoshihiro, 2021. "A bidirectional payment system for mitigating the supply–demand imbalance among prosumers based on the core of coalitional game theory under the enhanced use of renewable energy," Energy Economics, Elsevier, vol. 96(C).
    9. Li, Na & Hakvoort, Rudi A. & Lukszo, Zofia, 2022. "Cost allocation in integrated community energy systems — Performance assessment," Applied Energy, Elsevier, vol. 307(C).
    10. Andreolli, Francesca & D’Alpaos, Chiara & Moretto, Michele, 2022. "Valuing investments in domestic PV-Battery Systems under uncertainty," Energy Economics, Elsevier, vol. 106(C).
    11. Carattini, Stefano & Gillingham, Kenneth & Meng, Xiangyu & Yoeli, Erez, 2024. "Peer-to-peer solar and social rewards: Evidence from a field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 219(C), pages 340-370.
    12. Damianakis, Nikolaos & Mouli, Gautham Ram Chandra & Bauer, Pavol & Yu, Yunhe, 2023. "Assessing the grid impact of Electric Vehicles, Heat Pumps & PV generation in Dutch LV distribution grids," Applied Energy, Elsevier, vol. 352(C).
    13. Wang, Dongxue & Fan, Ruguo & Yang, Peiwen & Du, Kang & Xu, Xiaoxia & Chen, Rongkai, 2024. "Research on floating real-time pricing strategy for microgrid operator in local energy market considering shared energy storage leasing," Applied Energy, Elsevier, vol. 368(C).
    14. Zhou, Yuekuan & Lund, Peter D., 2023. "Peer-to-peer energy sharing and trading of renewable energy in smart communities ─ trading pricing models, decision-making and agent-based collaboration," Renewable Energy, Elsevier, vol. 207(C), pages 177-193.
    15. Ramallo-González, Alfonso P. & Loonen, Roel & Tomat, Valentina & Zamora, Miguel Ángel & Surugin, Dmitry & Hensen, Jan, 2020. "Nomograms for de-complexing the dimensioning of off-grid PV systems," Renewable Energy, Elsevier, vol. 161(C), pages 162-172.
    16. Mukherjee, Monish & Hardy, Trevor & Fuller, Jason C. & Bose, Anjan, 2022. "Implementing multi-settlement decentralized electricity market design for transactive communities with imperfect communication," Applied Energy, Elsevier, vol. 306(PA).
    17. Park, Sung-Won & Zhang, Zhong & Li, Furong & Son, Sung-Yong, 2021. "Peer-to-peer trading-based efficient flexibility securing mechanism to support distribution system stability," Applied Energy, Elsevier, vol. 285(C).
    18. Wakiyama, Takako & Zusman, Eric, 2021. "The impact of electricity market reform and subnational climate policy on carbon dioxide emissions across the United States: A path analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 149(C).
    19. Azim, M. Imran & Tushar, Wayes & Saha, Tapan K., 2021. "Cooperative negawatt P2P energy trading for low-voltage distribution networks," Applied Energy, Elsevier, vol. 299(C).
    20. Ovidiu Ivanov & Samiran Chattopadhyay & Soumya Banerjee & Bogdan-Constantin Neagu & Gheorghe Grigoras & Mihai Gavrilas, 2020. "A Novel Algorithm with Multiple Consumer Demand Response Priorities in Residential Unbalanced LV Electricity Distribution Networks," Mathematics, MDPI, vol. 8(8), pages 1-24, July.

    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:gam:jeners:v:15:y:2022:i:17:p:6209-:d:898223. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.