Are Consumption Tariffs Still Up-to-Date? an Operationalized Assessment of Grid Fees

Abstract

In many European countries, electricity-related charges, distribution grid tariffs and taxes for small consumers depend on the amount of energy they draw from the grid. Often, grid tariffs in regulated markets do not yet provide incentives for grid-compatible behavior e.g., load capping or a temporal shifting of loads. When designing new grid fee tariffs, regulators must consider a wide range of criteria: Economic incentives must be in line with grid operation and expansion. Further, practical aspects in terms of complexity, transaction costs and enforceability must be considered. In addition, ethical requirements must be met, since basic services must be provided for all participants. Most research evaluates new grid fee tariffs only regarding isolated aspects. Additionally, these aspects are usually only analyzed qualitatively. Our paper provides a comprehensive overview of the criteria for assessing grid tariffs in various aspects derived from literature. We propose measurable constructs to quantify three assessment criteria. These criteria are embedded in a framework to make grid tariffs comparable for a given population of grid users. The applicability of the framework is demonstrated for a stylized population of grid participants in four scenarios. The aim is to provide political decision-makers with a comprehensible basis for the evaluation and development of new tariffs for grid fees. We find that adding a demand component makes tariffs more cost reflective in all scenarios and leads to a smaller average bill change at the current shares of domestic PV and BEV usage compared to consumption based fees.