Effects of exceptional high electricity market price driven electricity consumption flexibility on customers’ peak powers and power-based tariffs

Abstract

Distribution system operators (DSOs) are facing significant changes happening in the customer loads. DSOs can develop their pricing to incentivise customers to use network capacity more efficiently. Peak power-based tariffs have been one alternative that some DSOs have already implemented also for their small-scale customers. In the Finnish case, the Energy Authority (regulator) has given a recommendation for harmonised tariff structure if power-based tariffs are introduced by DSOs. In previous studies it has been also shown that customers’ monthly peak powers are more stable basis of DSO’s charges than traditional energy-based charges. In this paper we study how volatile the basis of distribution bills would power-based tariffs have been during the exceptional energy year 2022, when electricity market spot prices in Finland increased significantly and customers were more flexible. The study is made using hourly electricity consumption data of 1610 customers during 1.1.2019–31.11.2023. We found that the monthly peak powers of customers are more stable basis for distribution fees during the exceptional year of the electricity market than energy consumption, but the recommended harmonised power-based fee appears to be even more volatile basis of charges from DSO’s cost recovery perspective.