The missing price feedback: Why studies overstate local grid peaks from synchronized home batteries under real-time pricing

Lion Hirth

Papers from arXiv.org

Abstract: Existing studies consistently find that home batteries optimized against real-time electricity prices create new load peaks in local distribution grids. This is because all assets respond to the same price signal in sync. However, most of these studies are simulations, and they all treat wholesale prices as exogenous, i.e., unaffected by the battery dispatch. This paper argues that assuming prices to be non-responsive biases the result: in reality, charging in low-price hours raises the wholesale price, which dampens the incentive to charge. In equilibrium, charging is spread out across hours. I test this by simulating households with rooftop solar and home batteries under a spot-based retail tariff with a model of equilibrium wholesale prices, calibrated to German data for 2025. With exogenous prices, my results confirm the literature findings: synchronous charging pushes the coincident import peak of the local grid to 83 % above its no-battery level. With endogenous prices, the same fleet leaves the peak 6 % below the no-battery benchmark. This finding is robust across alternative price functions and exogenous price paths, different measures of the coincident peak, 22 scenario variations and three historical years. I conclude that while new local peaks remain possible, particularly in grids that contain local clusters of home batteries, the risk and magnitude are considerably smaller than the existing literature suggests.

Date: 2026-09, Revised 2026-10
New Economics Papers: this item is included in nep-ene and nep-tre
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