Modeling Coordination Between Renewables and Grid: Policies to Mitigate Distribution Grid Constraints Using Residential PV-Battery Systems

60 Pages Posted: 17 Oct 2018

See all articles by Paul Neetzow

Paul Neetzow

Humboldt University of Berlin

Roman Mendelevitch

Humboldt University of Berlin - Resource Economics

Sauleh Siddiqui

Johns Hopkins University

Multiple version iconThere are 2 versions of this paper

Date Written: October 11, 2018

Abstract

Distributed photo-voltaic (PV) generation is one of the pillars of energy transitions around the world, but its deployment in the distribution grid requires costly reinforcements and expansions. Prosumage (consisting of a household-level PV unit coupled with a battery storage system) has been proposed as an effective means to facilitate the integration of renewable energy sources and reduce distribution grid stress. However, tapping its full potential requires regulatory interventions; otherwise, system costs could rise despite increasing flexibility. We analyze the effectiveness of different policy schemes to mitigate the need for distribution capacity expansion by incentivizing beneficial storage operation. Our novel top-down modeling approach allows analyzing effects on market prices, storage dispatch, induced distribution grid requirements, system costs, and distributional implications. Numerical results for German power system data indicate that required distribution grid requirements can be reduced through simple feed-in policies. A uniform limit on maximum grid feed-in can leave distribution system operators better off, even if they fully compensate prosumage households for foregone revenue. Policies imposing more differentiated limits at the regional level result in only marginal efficiency improvements. Complete self-sufficiency (autarky) is socially undesirable, as it confines important balancing potential and can increase system costs despite adding storage.

Keywords: Residential storage, renewable integration, distribution system operator, prosumage, policy, multi-level games, MPEC

Suggested Citation

Neetzow, Paul and Mendelevitch, Roman and Siddiqui, Sauleh, Modeling Coordination Between Renewables and Grid: Policies to Mitigate Distribution Grid Constraints Using Residential PV-Battery Systems (October 11, 2018). USAEE Working Paper No. 18-362. Available at SSRN: https://ssrn.com/abstract=3264805 or http://dx.doi.org/10.2139/ssrn.3264805

Paul Neetzow

Humboldt University of Berlin ( email )

Unter den Linden 6
Berlin, AK Berlin 10099
Germany

Roman Mendelevitch (Contact Author)

Humboldt University of Berlin - Resource Economics ( email )

Unter den Linden 6
Berlin, 10099
Germany

Sauleh Siddiqui

Johns Hopkins University ( email )

Baltimore, MD 20036-1984
United States

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