Balancing DSO interests and PV system economics with alternative tariffs

Abstract

Distributed rooftop photovoltaics (PV) is one of the pillars of the energy transition yet their widespread integration strains grids, leading to over-voltage, reverse power flow, and infrastructure strain. Furthermore, increased PV self-consumption reduces imported electricity, posing challenges for cost recovery by Transmission System Operators (TSOs) and Distribution System Operators (DSOs), whose grid costs were traditionally tied to volumetric tariffs. To investigate whether alternative tariffs could mitigate PV impacts at the distribution level without hampering PV development, we assess five electricity tariffs that could help the DSOs to recover the costs of maintaining the distribution grid. We also analyze their effects on private storage investment and their implications for urban, semi-urban, and rural low-voltage networks. We found that tariffs with a capacity-based component promote further adoption of PV and storage. At the same time, they allow the DSOs to recover the grid cost without incurring relevant economic differences for the customer. Our study found that alternative tariffs like dynamic and capacity-based tariffs promote the adoption of storage and PV systems. While no single tariff alone can fully mitigate PV impacts at the distribution level, our results point towards the need of managing PV export through solutions like PV curtailment.