Mechanisms to Coordinate Storage Investment and Network Expansion in Distribution Networks

37 Pages Posted: 8 May 2019

See all articles by Veronika Grimm

Veronika Grimm

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - School of Business & Economics

Julia Grübel

Friedrich-Alexander-Universität Erlangen-Nürnberg

Bastian Rückel

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - School of Business & Economics

Christian Sölch

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg

Gregor Zöttl

Friedrich Alexander Universität Erlangen Nürnberg

Date Written: April 9, 2019

Abstract

In this paper we propose a bi-level equilibrium model that allows to analyze the impact of different regulatory frameworks on storage and network investment in distribution networks. In our model, a regulated distribution system operator decides on network investment and operation while he anticipates the decisions of private agents on storage investment and operation. As adjustments of the current regulatory framework, we consider curtailment of renewable production, the introduction of a network fee based on the maximum renewable feed-in, and a subsidy scheme for storage investment. The performance of the different alternative frameworks is compared to the performance under rules that are commonly applied in various countries today, as well as to a system-optimal (first-best) benchmark. To illustrate the economic effects, we calibrate our model with data from the field project "Smart Grid Solar". Our results reveal that curtailment and a redesign of network fees both have the potential to significantly reduce total system costs. On the contrary, investment subsidization of storage capacity has only a limited impact as long as the distribution system operator is not allowed to intervene in storage operation.

Keywords: Computational Equilibrium Models, Electricity Markets, Investment Incentives, Distribution Expansion Planning, Storage Investment and Operation, (Self-) Consumption, Renewable Production

Suggested Citation

Grimm, Veronika and Grübel, Julia and Rückel, Bastian and Sölch, Christian and Zöttl, Gregor, Mechanisms to Coordinate Storage Investment and Network Expansion in Distribution Networks (April 9, 2019). Available at SSRN: https://ssrn.com/abstract=3369223 or http://dx.doi.org/10.2139/ssrn.3369223

Veronika Grimm

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - School of Business & Economics ( email )

Nuremburg
Germany

Julia Grübel

Friedrich-Alexander-Universität Erlangen-Nürnberg ( email )

Lange Gasse 20
Lange Gasse 20,
Nürnberg, 90403
Germany

Bastian Rückel

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - School of Business & Economics ( email )

Nuremburg
Germany

Christian Sölch (Contact Author)

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg ( email )

Lange Gasse 20
Nuremberg, Bavaria 90403
Germany

Gregor Zöttl

Friedrich Alexander Universität Erlangen Nürnberg ( email )

Nuremburg
Germany

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