Date: 2023
Type: Article
The economics of demand-side flexibility in distribution grids
The energy journal, 2023, Vol. 44, No. 1, pp. 215-244
NOUICER, Athir, MEEUS, Leonardo, DELARUE, Erik, The economics of demand-side flexibility in distribution grids, The energy journal, 2023, Vol. 44, No. 1, pp. 215-244
- https://hdl.handle.net/1814/76476
Retrieved from Cadmus, EUI Research Repository
To avoid unnecessary distribution network investments, distribution tariffs are expected to become more cost-reflective, and DSOs are expected to procure flexibility. This will provide an implicit and an explicit incentive to provide demand-side flexibility. In this paper, we develop a long-term bi-level equilibrium model. In the upper level, the DSO optimizes social welfare by deciding the level of investment in the distribution network and/or curtailing consumers. The regulated DSO also sets a network tariff to recover the network and flexibility costs. In the lower level, the consumers, active and passive, maximize their own welfare. We find that implicit and explicit incentives for demand-side flexibility are complementary regulatory tools, but there are limits. If network tariffs are too imperfect, the resulting consumption profiles can become too expensive to fix with curtailment. We also find that it is difficult to set an appropriate level of compensation because of the reaction by prosumers.
Additional information:
Published online: 01 January 2023
Cadmus permanent link: https://hdl.handle.net/1814/76476
Full-text via DOI: 10.5547/01956574.44.1.anou
ISSN: 0195-6574; 1944-9089
Publisher: SAGE Publications
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