Unit Equivalent Distribution Network Pricing for Electricity Retail Market

Abstract

Most existing network pricing methodologies are designed for retailers and large customers. With the development of responsive technologies, domestic customers may have very different impacts on networks cost, thus calling for a cost-reflective network pricing method for mass customers in the retail market. The naive volumetric and marginal pricing methods may cause issues of inequality and mis-signaling. Inspired by the Passenger Car Equivalent (PCE) in transportation economics, this paper proposes a Unit Home Equivalent (UHE) pricing to reflect the compatibility between electricity networks and a certain type of users. The method is validated against the Distribution Use of System (DUoS) charging methodology in the U.K. by using real network and household data. The results show the proposed pricing can encourage existing customers to adjust energy usage behaviours and guide new customers and EVs to the right locations.