Effects of major tariff changes by distribution system operators on profitability of photovoltaic systems

Electricity consumption patterns are expected to change in the future because of increasing usage of electric vehicles, heat pumps, and energy saving solutions. Moreover, residential customers are likely to invest in distributed renewable energy generation, such as photovoltaics (PV). These changes will decrease the delivered energy but increase momentary peak power in the distribution network. Since the electricity grid is dimensioned for peak power, electricity distribution system operators (DSOs) will have higher costs but reduced incomes with the energy-based pricing system. Hence, DSOs are considering shifting their pricing system to the more cost-reflective peak power-based pricing. However, this may reduce the PV profitability of residential customers. In this study, the changes in customers' PV profitability are compared under different DSO tariff structures. Customers' real hourly electricity consumption data is compared with the estimated PV production data, and the consequent changes in their electricity bills are analyzed. Our study shows that changing the DSO tariff system from energy-based tariffs to power-based tariffs will decrease the profitability that most customers would achieve by producing energy using PV-based systems.