Probabilistic assessment of a distribution tariff scheme for incentivizing demand side management in the small energy usage sector

Lately distribution utilities worldwide have been incentivized to reduce operating expenses that have severely increased with the integration of distributed generation. Enabling demand flexibility in the low voltage network seems a promising means at this direction. Given the current (low) electricity prices and the stochasticity of distributed generation and loads, this paper explores whether a capacity-based distribution tariff that rewards low power withdrawal during peak hours could incentivize small end-users to participate in demand side management. The assessment deploys a pseudo-sequential Monte Carlo simulation that uses quarter-hourly energy measurements and accounts for network constraint management. The presented case study highlights that a coordinated technical implementation is required, both during peak and non-peak periods, for not stressing LV network operation with the integration of flexibility. The potentially generated revenue for end-users, thanks to their response to the considered distribution tariff, results sufficiently motivating for engaging them in flexibility actions.