Designing grid tariffs in the presence of distributed generation

Abstract

In recent years, an increasing number of electricity consumers have decided to become prosumers. Prosumers can introduce both environmental and social benefits, as well as various utility and regulatory challenges. Utilities and regulators need to either update the current compensation systems and tariff structures or to develop new ones to account for the impact imposed on distribution system operators (DSOs) due to a high penetration rate of distributed generators (DGs), including costs related to connecting DG prosumers to the grid. The goal of this paper is to introduce and examine a novel, multi-part tariff structure that accounts for these costs under the net metering mechanism. Our results show that by applying a multi-part tariff for prosumers, which includes a fixed component that reflects recurring grid-connection costs together with a variable component that reflects the net effect on operating cost of distribution networks, it is possible to alleviate the drawbacks of net metering and optimize prosumption.