Tariff Structures to Evolve Away from Consumption-based Pattern Alone

Network development is increasingly driven by the renewables paradigm: The need for flexibility, the coexistence of centralised and decentralised generation all require important network investments. Since partial or full self-consumption patterns develop and the current network tariffs are largely based on ‘yesterday’s’ unidirectional flows from generation to consumption, there is a need for an update of transmission and distribution tariffs. Tariffs have to be reflective of the actual grid costs and hence have to encompass an adequate component of fixed and capacity cost. The emerging self-consumption model has economic benefits for consumers because it opens new cost-containment opportunities, allowing them to increasingly control their energy bills. Selfconsumption can also lower wholesale energy prices, for instance, by reducing eventually peak demand.

However, although it maximises the economic benefit of the individual, self-consumption might have unintended negative consequences for society at large if self-consumers benefit from the security of the grid without paying for it (for instance, when using it to sell surplus electricity to the grid). To ensure that consumers can continue to benefit from self-consumption without upsetting network development, national regulatory authorities (NRAs) should allow TSOs and DSOs to shift more grid costs to the capacity component of the bill so that consumers are further incentivised to manage their consumption while still contributing their share to their actual use of the networks.

Recommendations

  1. TSOs and DSOs should be closely involved by ACER and NRAs in assessing alternative models for network tariffs.