Time-of-use network charges for more flexible electricity demand

At present, electricity network charges are usually levied independently of actual grid utilisation. In this form, they do not create incentives for grid-supportive behaviour. In the ongoing AgNes process of the Federal Network Agency, a stronger temporal and spatial dynamisation of network charges is being discussed. The aim is to make electricity consumption more flexible and to use grid infrastructure more efficiently. One option for making network charges more flexible is to introduce time-of-use tariff structures for network charges. In this case, network operators set different tariff levels based on expected grid utilisation, with the level varying over time and by location. Households with controllable consumption devices, such as electric vehicles or heat pumps, can adjust their electricity consumption specifically to these time-of-use tariffs and thereby achieve cost savings on their network charges.

However, the savings potential that flexible households can realise, and the extent to which such time-of-use tariff structures for network charges actually affect the load behaviour of flexible households, depends on the tariff design, the season and the household’s specific technological equipment. This is shown in the new EWI short study “Potential effects of time-of-use network charges – a model-based analysis”. On behalf of the German League for Nature and Environment (DNR), a team from the Institute of Energy Economics at the University of Cologne (EWI) used the optimisation model “Electroscape” to analyse the impact of time-of-use network charges on annual electricity procurement costs and load profiles of different household types.

Technological equipment crucial for impact on annual electricity procurement costs

Households without energy transition technologies can only respond to time-of-use network charges to a limited extent. Since they can hardly shift their electricity consumption flexibly – for example for cooking – without their own generation or storage options, adjustments are only possible through changes in behaviour. The analysis shows that introducing time-varying network charges does not, however, lead to significant additional annual electricity costs for non-flexible households if their usage behaviour remains constant. This is because the tariff structures are designed in such a way that they reflect the annual costs of a constant charge for standard load profiles.

Households with energy transition technologies – such as photovoltaic systems, battery storage or electric vehicles – can achieve significant cost savings through the introduction of a time-of-use tariff model. By adjusting their consumption to the time-dependent tariffs, the households considered can reduce their electricity procurement costs by up to 12 percent, according to the analysis. If they additionally use dynamic electricity price tariffs, further savings are possible.

Time-of-use charges affect load behaviour of flexible households to different degrees

In the case study, households in single-family homes with a photovoltaic system, battery storage, electric vehicle and heat pump hardly adjust their electricity consumption to time-of-use tariffs in summer. This is because, in summer, their electricity consumption can largely be covered by PV generation and stored solar power. The surplus solar power generated during the day is fed into the grid despite the low tariff for network charges – the grid is not relieved in this case.

For urban households with an electric vehicle and a balcony PV system, a different picture emerges. These households can adjust the charging time of their electric vehicle to the time-of-use tariffs for network charges and charge predominantly in the early morning hours, when grid load is low (see figure). This could help reduce the need for grid expansion, although potential counter-effects due to many households charging simultaneously at times of low electricity costs must be taken into account.

For time-of-use network charges to create grid-supportive incentives, the different regional and seasonal conditions in the electricity grids must be taken into account. “The analysis shows that future time-of-use tariff models for network charges should be designed with regional and seasonal differentiation in order to reflect the different consumption and generation structures,” explains Philipp Artur Kienscherf, Head of Research at EWI. “In addition, potential distributional effects should be considered at an early stage.”