Capacity Subscription Tariffs for Electricity Distribution Networks: Design Choices and Congestion Management

Residential distribution networks in Europe are undergoing rapid changes. As high-power flexible loads, such as electric vehicle (EV) chargers, become more prevalent, the risk of network congestion increases. This is exacerbated by tariff structures which do not give incentives to limit simultaneous power consumption. Network charges in this case may not reflect the true costs of usage, as network costs are driven mainly by simultaneous load peaks.We present a systematic assessment of a new class of tariffs that is currently gaining attention in the Netherlands: capacity subscription models. We argue that this tariff structure is more cost-reflective and fair than the current fixed network fee and show how it helps to prevent transformer overloading in a simple simulation model of a neighborhood of 100 households constrained by a LV transformer, where a varying number of EVs are added.