Utilizing End-User Flexibility for Demand Management Under Capacity Subscription Tariffs

Abstract

The Norwegian regulator has proposed a new grid tariff, based on capacity subscription, where the consumer pays an excess fee whenever he exceeds the subscribed level. We compare this tariff with a variant of capacity subscription where demand is physcially limited to the subscribed level, but where the limitation is activated only when there is grid congestion. The results show that this can be an attractive option if demand can be flexibly controlled to stay below the subscribed limit, which is increasingly possible. Use of a battery is also attractive, but the investment costs are still much too high.