The Fair-Grid project
A shift towards renewable energy sources, especially renewable electricity, is one of the key pillars of the EU's planned transformation towards a climate neutral society. Continuously increasing variable renewable electricity generation and rising electricity demand pose a challenge to stable operation of electricity grids and require large-scale investment in transmission and distribution grids. Against this background, there is an emerging debate on how to adjust grid charges to more accurately reflect the costs associated with delivering network services to final consumers. The challenge is to design grid charges in a way that they recover the costs of the electricity grid expansion required for the energy transition, are cost-reflective, and provide for fairness between different groups of users. Fair-Grid contributes to this debate by providing comprehensive model-based analyses of the techno-economic, macroeconomic and distributional effects of different grid charge options.
Fair-Grid aims at contributing to the research on the financing of electricity grids in the context of the transition towards a renewable energy system. The challenge is to ensure a stable and economically efficient provision of grid services and to attribute costs to the different beneficiaries in a fair way. In the context of this project, "fair" means that all energy consumers and producers contribute to the financing of the electricity grid and that low-income households are not be made worse off. Specifically, we focus on two research questions:
- What are suitable mechanisms, considering different criteria for fairness while ensuring the required grid expansion, for distributing the grid expansion and maintenance costs between different actors, i.e. the public budget, electric utilities, and final consumers?
- In accordance with the above, what are the suitable mechanisms for distributing grid costs between prosumers and mere electricity consumers?
We conduct model-based simulations of different options for distributing the costs of electricity grid development in Austria. We link the macroeconomic model DYNK with two specialised energy system models: On the one hand, BALMOREL is used to inform on wholesale market trends for underlying energy sector transformation pathways and thereby incorporate possible changes in overall electricity demand (from DYNK) in dependence of the grid charging mechanism. On the other hand, the flexibility optimization framework Femto.jl is applied to evaluate the effects of different grid tariff designs on representative distribution grids and corresponding actors like prosumers, consumers, or grid operators. Our modelling will indicate the macroeconomic and distributional impacts of the assessed options. Furthermore, it also shows the effects on and reactions of prosumers and other consumers, impacting the local grid as well as the overall power system.
The project Fair-Grid comprises the following four content-related work packages:
WP2: Model Adjustment and Linking
