Rate design with distributed energy resources and electric vehicles : a Californian case study

Abstract

The high penetration of distributed energy resources and electric vehicles is changing the way the electricity system is managed. In turn, the way utilities have been recovering their expenditures through tariffs needs reformulation. We investigate the impact of different retail tariff designs from a Californian scenario on private investment incentives and cost-shifting using solar PVs, stationary batteries, and electric vehicles. The commercial private facilities studied do not own the vehicles and the vehicle owners receive compensation for energy services provided, which strongly depends on the type of tariff applied. We found that energy-based tariffs with on-peak periods synchronized with solar PV production brought the highest private gains, but with high cost-shifting. On the other hand, the capacity-based tariffs reduced the economic benefits and cost-shifting concomitantly, mainly when on-peak periods defined by the rate matched the most constrained grid time window. Batteries are incentivized mostly to offset maximum demand charges rather than to arbitrage energy, but this will strongly depend on the spread between on-peak and off-peak periods. Coincident peak rates, coupled with EVs, can bring high remuneration for EV owners, second-highest net present value, and second-lowest cost-shifting among all rates. Finally, we derive policy implications from the results and earmark more sophisticated tariff designs for investigation.