Spillover effects of distribution grid tariffs in the internal electricity market: An argument for harmonization?

Niels Govaerts, Kenneth Bruninx, Hélène Le Cadre, Leonardo Meeus and Erik Delarue

Energy Economics, 2019, vol. 84, issue C

Abstract: In many countries, distribution grid tariffs are being reformed to adapt to the new realities of an electricity system with distributed energy resources. In Europe, legislative proposals have been made to harmonize these reforms across country borders. Many stakeholders have argued that distribution tariffs are a local affair, while the European institutions argued that there can be spillovers to other countries, which could justify a more harmonized approach. In this paper, we quantify these spillovers in a simplified numerical example to give insight and an order of magnitude. We look at different scenarios, and find that the spillovers can be both negative and positive. To be able to quantify these effects, we developed a long-run market equilibrium model that captures the wholesale market effects of distribution grid tariffs. The problem is formulated as a non-cooperative game involving consumers, generating companies and distribution system operators in a stylized electricity market.

Keywords: Distribution grid tariff design; Distributed energy resources; Non-cooperative game; Energy policy; Spillovers (search for similar items in EconPapers)
JEL-codes: C72 D61 L51 L94 Q41 Q42 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:84:y:2019:i:c:s0140988319302403

DOI: 10.1016/j.eneco.2019.07.019

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