Power based distribution tariffs_Pertti Järventausta_110516

Power based distribution tariffs

Electricity markets in disruption Research seminar 11.5.2016

Prof. Pertti JärventaustaTampere University of Technology

UPS systems

Smart grids has two main functions, which are challenges to the distribution system:

1) Enabler of energy-efficient and environmentally friendly open energy market– interactive customer interface, integration of active resources, demand response,

common market models and comprehensive ICT solutions

Smart Grids - Future Energy SystemsDistributed energy resources with fully integrated network management

2) Critical infrastructure of society ̶ fault and major disturbance

management̶ self-healing networks̶ island operation and

microgrids

Structure of power system

large power plants

transmission network

subtransmission networksmall power plants

distribution network

customer

Structure of power system

large power plants

transmission network

subtransmission networksmall power plants

distribution network

customer

Principles of pricing electricity

Electricity energy trading

– competition– individual pricing

possible– cost correlation– public prices for

those small customers who don’t invite tenders

• these public prices are supervised

Basic fundament: – energy and distribution are priced separately

Electricity distribution– monopoly – point tariff – same price for same kind of

customer types (fuse size)• not dependent on

customer location– reasonable and non-

discriminatory pricing– fairness <-> cost correlation– public prices which authority

supervises

Point tariff - pricing electricity transmission and distribution

=production =consupmtion

Subtransmissionnetwork

Distributionnetwork

Distributionnetwork

Transmission network

• Customer can use the whole national power grid from his connection point• Network tariff is not allowed to be dependent on customer location in the network

Forming the price of electricity for households

Electricity production31 %

Electricity trade6 %

Transmission3 %

Sub-transmission2 %

Distribution32 %

Electricity taxes8 %

VAT18 %

An average price of household customer in 2012 was 14,73 snt/kWh in Finland

Tariff structures in Finland

• Energy retailer’s tariffs components̶ basic fee (€/month) ̶ energy-based fee (€/kWh),fixed or time-of-use (daytime / night time)̶ as a new product also dynamic tariffs (€/kWh), e.g. based on spot-price

• DSO’s tariff components̶ basic fee (€/month)̶ energy-based fee (€/kWh), fixed or time-of-use (daytime / night time)̶ power fee (€/kW) for bigger customers̶ new possible tariff structures under investigations

• power tariff also for small customers• power band / software fuse• various new combinations incentives for DR from DSO viewpoint

• Customers wants to minimize the sum of electricity costs

Power based distribution tariffs

• Some of the essential questions in determining distribution tariffs

– How could different distribution tariffs be formed so that the pricing would be• non-discriminative towards different customers?• cost-reflective?• encouraging towards total energy and resource efficient consumption?

– What kind of distribution tariff structures would be suitable for the operational environment of Smart Grid so that they would include

• good incentives for boosting Demand Response?• possibilities also for other market participants (e.g. energy retailers)

to be able to benefit from them?

The benefits and market places of the DSM from the viewpoint of different stakeholders

DSM

Customer

Energy cost minimization

DSO

Peak power limitation

Retailer

Spot-markets

Elspot-market

Elbas-market

Balance management

TSO

Balancing power market

Reserve power market

Frequency controlled normal operation

reserve

Frequency controlled disturbance reserve

Automatic Frequency Restoration Reserves

Fast disturbance reserve

Lähde: DR-pooli –projektin loppuraportti

Transformer load, consumption of piloted customer1 and the spot price of electricity

Lähde: Aalto Joni, Development opportunities for smart metering services …., Diplomityö, TTY, 2011

• DSO and energy retailer may have conflict of interest when using Demand Response functions – both actors can offer products (or services) which have effects on

customers’ load demand and impacts on business of the other actor• energy retailer: spot-price based or other dynamic products• DSO: novel power or time-of-use based network tariffs

• Impacts of spot-price based product of retailer and various power-based network tariffs are studied by simulations in the real distribution network

Demand Response from DSO and energy retailer point of view

Network impacts of Demand ResponseMain

transformer 1: 110/20 kV16 MVA

MV feeder 1, N = 378, E = 5.3 GWh/a


MV feeder 3, N = 1190, E = 8.4 GWh/a

MV feeder 4, N = 1166, E = 9.5 GWh/a


MV feeder 6, N = 1997, E = 16.6 GWh/a

MV feeder 7, N = 1116, E = 12.3 GWh/a

MV feeder 8, N = 411, E = 11.4 GWh/a

MV feeder 9, N = 673, E = 22.7 GWh/a

110 kV

Main transformer 2:

110/20 kV16 MVA

20 kV

20 kV

• Impacts of spot-price based product of retailer and various power-based network tariffs are studied by simulations in the real rural distribution network of one 110/20 kV primary substation supplying̶ 457 km MV and 793 km LV network, 469

secondary substations ̶ 7612 customers, whose hourly AMR

measurement data over several years were available

Energy storage

Public distribution

network

kWhAMR meter

Electricity consumer’s

main bus bar

Consumption

Power measurement HEMS

Load control and forecasting

Storage control

Simulated hourly load curves of each 7612 customers over the whole year based on different minimization criteria to be used in load flow calcalutions in different case studies

Original hourly AMR-data of 7612 customers used in load flow calcalution of original situation

Optimization:1) based only on spot-prices2) based only on power based network tariff 3) combination (minimization) of above cases

The hourly spot-price (area price in Finland) 1.11.2011-31.10.2012

Peak powers of secondary transformers (20/0.4 kV)

• peak powers are presented in percentages of the transformers’ ratings

• the vertical orange dash lines represent the average peak power level and the vertical red line the more or less critical limit 100%.

Simulated power based network tariffs1. Power fee tariff (PT1) 2. Peak power based energy charge (PT2)

3. Hourly distribution charge based on hourly power, continuous version (PT3)

4. Hourly distribution charge based on on hourly power, stepwise version (PT4)

5. Power band (e.g. 3, 5, 8, 10 ja 13 kW) - fixed monthly cost [€/month] based on the annual peak power - penalty based on the number of overruns or the magnitude of overrun

Peak powers of secondary transformers• peak powers are

presented in percentages of the transformers’ ratings

• the vertical orange dash lines represent the average peak power level and the vertical red line the more or less critical limit 100%.

Average annual total costs of the customers with different types of distribution tariffs in different simulated case studies

• Remark: Average annual total costs of the customers is 1617 €/a, when optimization is done using spot-price based energy price and customers’ present network tariff

• DSO and energy retailer may have conflict of interest when using Demand Response functions – both actors can offer products (or services) which have effects on

customers’ load demand and impacts on business of the other actor• energy retailer: spot-price based or other dynamic products• DSO: novel power or time-of-use based network tariffs

• Impacts of spot-price based product of retailer and various power-based network tariffs are studied by simulations in the real distribution network Spot-price based load control may increase peak powers in the

distribution network Power based network tariff mitigate the peak powers in the

network due to the spot-price based load control Total costs of customers can be minimized by taken both

viewpoints into account

Demand Response from DSO and energy retailer point of view

Scenarious of distribution network tariffs – relation of energy and power-based pricing components

Energy-based network tariffs

Present state

- higher peak loads in the grid- grid strengthening investments- increase in unit prices (snt/kWh)

?

No DR or energy storages

Power-based network tariffs

+ revenue based on cost causing+ grid strengthening investments may

be postponed or avoided by mitigating higher peak loads due to spot-price based DR

- implementation of new tariff structures and communication with customers

+ revenue based on cost causing+ mitigating present peak loads in grid

which means that grid strengthening investments may be postponed or avoided


Spot-price controlled DR or energy storages

Scenarious of distribution network tariffs – relation of energy and power-based pricing components

Energy-based network tariffs

Present state

+ lower demand in the grid- smaller revenue for the DSO- high production hours may cause grid strengthening investments- increase in unit prices (snt/kWh)

?

No production at customers site

Customers’ own small-scale production (e.g. PV)

Power-based network tariffs

+ revenue based on cost causing- implementation of new tariff structures

and communication with customers

+ revenue based on cost causing+ mitigating present peak loads in grid

which means that grid strengthening investments may be postponed or avoided


Cost-causation based approach in forming power-based distribution network tariff for small customers• Case study of Helen Electricity Network

– two primary substations supplying 30 MV feeders and 103 secondary substations with the total number of customers being over 32 000.

– real network, consumption (hourly measurements from 2013 and 2014) and cost data for determining cost-causation based tariffs

DISTRIBUTION NETWORK TARIFFS OF SMALL CUSTOMERS WITH PRESENT TARIFF STRUCTURES

POWER-BASED DISTRIBUTION NETWORK TARIFF OF SMALL CUSTOMERS

Cost-causation based approach in forming power-based distribution network tariff for small customers

Changes in the distribution fees of small customers when tariff from table II would have been used instead of tariffs from table I

Thank you for your attention!

Any questions?