Impact of Network Tariffs and Electricity Prices on the Investment Decisions for PV-Battery Systems

Abstract

This paper aims to assess the impact of a volumetric and a capacity-based network tariff, as well as the impact of a substantial electricity price increase on the decision of a household to invest in a PV-battery system. Therefore, a convex optimization model is implemented which returns the optimal sizing and operation from the households' perspective by minimizing the equivalent annual cost. Based on the analysis of the optimal PV-battery system for 200 households under four scenarios, this study found that the investment driver of a household changes from minimizing grid withdrawal to maximizing grid feed-in when the feed-in remuneration increases, as well as the maximization of the installed PV capacity. In addition, the price increase leads to a net profit as opposed to a reduced cost. The shift from a volumetric to a capacity-based tariff leads to a smaller gap between the consumers' and prosumers' contribution to the distribution grid costs, increasing fairness. However, the contributions could be insufficient to ensure adequate cost recovery, requiring possible adjustment of the tariff height by the DSO. Finally, policy makers need to be aware that a capacity-based tariff leads to a lower reduction of carbon emissions as opposed to a volumetric tariff.