Storage investment and network expansion in distribution networks: The impact of regulatory frameworks

• Published in: Applied energy 2020-03, Vol.262, p.114017, Article 114017
• Main Authors: Grimm, Veronika, Grübel, Julia, Rückel, Bastian, Sölch, Christian, Zöttl, Gregor
• Format: Article
• Language: English
• Subjects: (Self-) consumption; Computational equilibrium models; Distribution network expansion planning; Electricity markets; Investment incentives; Renewable energy production; Storage investment and operation
• ISSN: 0306-2619; 1872-9118
• DOI: 10.1016/j.apenergy.2019.114017

•A linearized AC power flow model is proposed and validated for economic analyses.•The system optimum shows high efficiency potential compared to current regulation.•Smart curtailment of renewables realizes most of the efficiency potential.•Capacity-based storage subsidies do not significantly increase system efficiency.•A feed-in fee may incentivize a network-efficient storage operation by prosumers. 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. Since, especially in distribution networks, voltage stability and network losses have a decisive influence on network expansion and operation, we use a linearized AC power flow formulation to adequately account for these aspects. 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.