Aligning prosumers with the electricity wholesale market – The impact of time-varying price signals and fixed network charges on solar selfconsumption.

Abstract

PV-battery systems are currently not operated in an energy system optimal way as their operation heuristic (maximization of self-consumption) is generally unaffected by competitive market signals. To evaluate potential regulatory intervention, we propose a market alignment indicator which measures the relative economic efficiency of a prosumer battery compared to a benchmark system that is completely responsive to wholesale market prices. Investigating the case of PV-battery systems in Germany, we find that scarcity signals transmitted to prosumers improve the market alignment of PV-battery systems while retaining similar levels of self-consumption and autarky rates. Both dynamic prices for generation (time-varying feed-in remuneration) and consumption (real-time electricity prices) can improve welfare, that is lowering consumer expenditures for electricity at the wholesale market. The effectiveness of the respective instrument mix depends on the relative levels of the feed-in tariff, the grid consumption to be saved and the solar generation costs. Accordingly, increasing fixed network charges can have a significant positive impact on the market alignment of prosumer batteries if combined with dynamic prices, as they change the relative composition of retail prices.