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Electricity Network Charging for Flexibility

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  • Michael G. Pollitt

    (Energy Policy Research Group University of Cambridge)

Abstract

This paper discusses the principles of electricity network charging in the light of increasing amounts of distributed generation and the potential for significant increases in electric vehicles or distributed electrical energy storage. We outline cost reflective pricing, traditional public service pricing, platform market pricing and customer-focussed business model pricing. We focus on the particular problem of how to recover network fixed costs and a recent example from Australia. We conclude that there are serious issues for regulators to address, but that potential solutions at the distribution level may already exist at the transmission level.
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Suggested Citation

  • Michael G. Pollitt, 2016. "Electricity Network Charging for Flexibility," Working Papers EPRG 1623, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1623
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    References listed on IDEAS

    as
    1. Rocha, Marta & Baddeley, Michelle & Pollitt, Michael & Weeks, Melvyn, 2019. "Addressing self-disconnection among prepayment energy consumers: A behavioural approach," Energy Economics, Elsevier, vol. 81(C), pages 273-286.
    2. Oseni, Musiliu O. & Pollitt, Michael G., 2017. "The prospects for smart energy prices: Observations from 50 years of residential pricing for fixed line telecoms and electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 150-160.
    3. Claire M. Weiller & Michael G. Pollitt, 2013. "Platform Markets and Energy Services," Cambridge Working Papers in Economics 1361, Faculty of Economics, University of Cambridge.
    4. Michael G. Pollitt and Karim L. Anaya, 2016. "Can current electricity markets cope with high shares of renewables? A comparison of approaches in Germany, the UK and the State of New York," The Energy Journal, International Association for Energy Economics, vol. 0(Bollino-M).
    5. Roger E. Bohn & Michael C. Caramanis & Fred C. Schweppe, 1984. "Optimal Pricing in Electrical Networks over Space and Time," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 360-376, Autumn.
    6. John Hills, 2012. "Final report of the Hills Independent Fuel Poverty Review: Getting the Measure of Fuel Poverty," CASE Reports casereport72, Centre for Analysis of Social Exclusion, LSE.
    7. Kwan, Calvin Lee, 2012. "Influence of local environmental, social, economic and political variables on the spatial distribution of residential solar PV arrays across the United States," Energy Policy, Elsevier, vol. 47(C), pages 332-344.
    8. Boiteux, M., 1971. "On the management of public monopolies subject to budgetary constraints," Journal of Economic Theory, Elsevier, vol. 3(3), pages 219-240, September.
    9. Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-242, September.
    10. Mallika Chawla & Michael G. Pollitt, 2013. "Energy-efficiency and Environmental Policies & Income Supplements in the UK: Evolution and Distributional Impacts on Domestic Energy Bills," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    11. Philipp-Bastian Brutscher, 2012. "Self-disconnection among pre-payment customers: a behavioural analysis," Working Papers EPRG 1207, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    12. Brutscher, P., 2012. "Self-Disconnection Among Pre-Payment Customers - A Behavioural Analysis," Cambridge Working Papers in Economics 1214, Faculty of Economics, University of Cambridge.
    13. John Hills, 2012. "Getting the measure of fuel poverty: Executive summary," CASE Briefs 31, Centre for Analysis of Social Exclusion, LSE.
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    Cited by:

    1. Newbery, David & Pollitt, Michael G. & Ritz, Robert A. & Strielkowski, Wadim, 2018. "Market design for a high-renewables European electricity system," Renewable and Sustainable Energy Reviews, Elsevier, vol. 91(C), pages 695-707.
    2. Ken Furusawa & Gert Brunekreeft & Toru Hattori, 2019. "Constrained Connection for Distributed Generation by DSOs in European Countries," Bremen Energy Working Papers 0028, Bremen Energy Research.
    3. Faerber, Laura Antonia & Balta-Ozkan, Nazmiye & Connor, Peter M., 2018. "Innovative network pricing to support the transition to a smart grid in a low-carbon economy," Energy Policy, Elsevier, vol. 116(C), pages 210-219.
    4. Crampes, Claude & Renault, Jérôme, 2019. "How many markets for wholesale electricity when supply ispartially flexible?," Energy Economics, Elsevier, vol. 81(C), pages 465-478.
    5. Langlois-Bertrand, Simon & Pineau, Pierre-Olivier, 2018. "Pricing the transition: Empirical evidence on the evolution of electricity rate structures in North America," Energy Policy, Elsevier, vol. 117(C), pages 184-197.
    6. Schittekatte, Tim & Momber, Ilan & Meeus, Leonardo, 2018. "Future-proof tariff design: Recovering sunk grid costs in a world where consumers are pushing back," Energy Economics, Elsevier, vol. 70(C), pages 484-498.

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    More about this item

    Keywords

    network charging methodology; platform market.;

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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