Addressing Premature Reinforcement of Low-Voltage Distribution Infrastructure with Peak-Shaving and Power Curtailment: a Business Model

The uncontrolled inclusion of renewable energy sources in the distribution network causes severe overvoltages. Simultaneously, electrification strategies, such as heat pumps and electric vehicles, increase the peak demand, causing undervoltages. The combination of both phenomena has proven challenging for distributed system operators who are accountable for power quality and accessibility. System operators address those voltage issues with network reinforcements, but such projects are costly and time-consuming. We identified that the cost and qualified workforce availability are the main challenges of premature grid reinforcement. This paper evaluated peak-shaving and power curtailment at the low voltage distribution level as market-based alternatives to provide flexibility using the business model canvas. We identified the main actors that would benefit from peak-shaving and power curtailment at the residential level, their relationships, and the value proposition's challenges. We proposed a business model where residential prosumers receive compensation for supporting the network to prevent the distribution system from surpassing the projected power flows. Both alternatives offer system operators more control over the power flow to ensure power quality while decreasing costs, as fewer or no premature grid reinforcements might be needed. The business opportunity resources are categorized as technical and regulatory, highlighting the latter as the main challenge for the business model. We discussed two residential prosumer case scenarios for the Dutch context, one with a PV system and one with a PV and a heat pump. Our analysis suggests that the business models are technically possible for peak-shaving and power curtailment with existing technologies for the selected target. However, the former requires more complex activities and is limited to a narrower segment, as it requires prosumers with PV, storage and high-load devices, such as heat pumps.