Exploratory Analysis on the Impact of Grid Tariffs in Transmission Expansion Planning

Abstract

The cost of grid tariffs is expected to rise and account for an ever-increasing share of electricity consumers’ invoices. Hence, it is imperative to factor these costs in when modelling electricity demand behaviour in a market-driven environment. Accurate demand profiles are essential for optimising transmission expansion planning (TEP) as an accurate representation of electricity demand profiles aids in finding the most beneficial expansion plan. Common TEP formulations in the literature do not include the costs accumulated by grid tariffs. This paper proposes a revised problem representation incorporating a version of grid tariffs in the objective function of TEP optimisation. An analysis is carried out to estimate the sensitivity of the planning strategy to different ratios of grid tariffs to generation costs. It could be concluded that as the grid tariffs are of the same magnitude as the generation costs, the optimal planning strategy foresees to retrofit lines facilitating local generation over grid-sourced electricity. If the grid tariff is further increased, there will be no significant deviation in the expansion plan from the optimal expansion plan generated at grid tariff to generation cost parity.