Tariff Schemes and Socioeconomic Factors in Equilibrium Analysis of DER Investments

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Miguel holds a PhD in Electrical Engineering, jointly awarded by the University of Manchester (UK) and the Universidad de Chile. He is currently a Postdoctoral Researcher at the Department of Engineering Science, University of Oxford, and a member of Centro Enlace in Chile. His research focuses on energy systems optimisation and the integration of energy fairness principles into quantitative decision-making models.

Abstract: Prosumers' deployment of distributed energy resources (DER) is shaped by market incentives and budget constraints. Effective DER integration can reduce the long-term need for distribution network infrastructure, thereby diminishing overall electricity costs. Nevertheless, it may negatively impact cost allocation among users from different socioeconomic backgrounds. To analyze the efficiency and distributional aspects of DER deployment across different socioeconomic groups, this study employs a novel equilibrium model based on Stackelberg games. The model simulates interactions between a proactive lowvoltage distribution network planner and prosumers who may invest in photovoltaic systems and batteries. Prosumers aim to minimize expenses based on tariffs, without knowledge of their peers' decisions. Due to the non-linearities introduced by the tariff structure, a Gauss-Seidel algorithm is employed to reduce model complexity. The study examines six tariff combinations, revealing that cost allocation varies significantly depending on the tariff design. In this regard, the results show the risks associated with certain tariff designs, including potential losses in efficiency or unfair cost allocation. Likewise, the results highlight the value of cost-reflective tariffs in reducing unintended cross-subsidies. These findings underscore the importance of thoughtful tariff design and network planning in promoting both a distributional fairness DER deployment and system-wide efficiency.