Impact of Distribution Tariff Design on the Profitability of Aggregators of Distributed Energy Storage Systems

The distribution tariff design, which is currently being overhauled in multiple European countries, is a significant part of a residential consumer's electricity bill. This paper studies how the tariff design influences the behavior of a strategic aggregator, of residential consumers with photovoltaics (PV) and energy storage systems (ESS), on a wholesale market. The aggregator-wholesale market interaction is formulated as a Stackelberg game. We show that the distribution tariff design impacts the strategic operation of the aggregator's PV and ESS and the accompanying cost savings the aggregator attains compared to a retailer of active consumers.