Effective and cost reflective distribution tariffs

Innovative distribution tariffs that facilitate the energy transition

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The power system is undergoing significant changes. There is a common understanding that grid tariffs, the mechanism for sharing the costs for building and maintaining the electricity infrastructure between all electricity users and producers, needs to change accordingly. The current mechanism will no longer lead to a fair and cost-reflective distribution of the cost, nor does it provide incentives stimulating an efficient use of the electricity grid. The fast growth of electricity demand, with potentially high simultaneous use, combined with a fast growth of distributed generation (that, in general, does not coincide with demand), forces us to re-think which grid tariff design is most suitable for a carbon-low future.

In this paper, DNV embarks on a quest to find a future-proof grid tariff mechanism for the residential segment, suitable for systems characterised by a separation between grid as a monopoly service and supply as a competitive branch.