Impact of Alternative Transport Tariffs on Battery Performance

Abstract

The Dutch energy system is evolving rapidly, transitioning from centralized fossil-based generation to decentralized renewable sources. At the same time, electrification is increasing across heating, mobility, and industry, placing significant strain on the electricity grid. This imbalance between supply and demand leads to severe congestion issues, costing the Netherlands approximately 20-40 billion EUR annually. While expanding grid infrastructure is an option, it is costly, time-consuming, and constrained by resource shortages. As an alternative, market-driven flexibility solutions such as battery storage, alongside regulatory interventions like alternative transport tariffs, are being explored for their potential to relieve congestion.
This research examines how alternative transport tariffs impact battery behavior and grid stability in the Dutch distribution network. Specifically, it evaluates the effects of two newly introduced tariff structures: Time-of-Use (TOU) tariffs, which warrant flexible participation on the grid, and Time-Block (TB) tariffs, which provide discounts for energy usage within predefined time windows. The study assesses battery behavior, congestion relief, and financial viability under these tariffs, comparing their effects to a baseline scenario without alternative transport tariffs and without a battery. A key objective is to determine whether non-market-based mechanisms such as alternative transport tariffs can enhance congestion management and whether the TOU tariff should be extended to the distribution grid.
To analyze these effects, a quantitative modeling approach is used, combining a Mixed Integer Linear Programming (MILP) model, which optimizes battery operation in the day-ahead and intraday electricity markets, with a PyPSA distribution network model, which simulates battery interactions within the grid. The study evaluates three scenarios: no tariff, TOU tariffs, and TB tariffs. A sensitivity analysis is conducted to examine the robustness of results under different price fluctuations and seasonal variations.
The results show that battery storage significantly improves congestion management by reducing line overloading, renewable energy curtailment, and peak loads. However, the extent of these benefits depends on the tariff design. The Time-of-Use tariff proves to be an effective mechanism, providing a structured yet flexible approach that allows batteries to optimize charging and discharging based on real-time grid conditions. This improves both their financial viability and their role in congestion relief. In contrast, the Time-Block tariff imposes rigid constraints that limit battery owners’ ability to adapt to market signals, significantly reducing both the financial attractiveness and technical effectiveness of batteries for congestion management. Seasonal variations also affect battery performance, with winter periods exhibiting higher volatility due to fluctuating energy demand and supply conditions. While some peak shaving occurs under all tariff scenarios, its effectiveness is reduced under the TB tariff because of its restrictive design...