Congestion management in electricity distribution networks: Smart tariffs, local markets and direct control

Increasing peaks from high-power loads such as EVs and heat pumps lead to congestion of electric distribution grids. The inherent flexibility of these loads could be used to resolve congestion events. Possible options for this are smart network tariffs, market-based approaches, and direct control of flexible loads by the network operator. In most instances, these approaches are looked at in isolation, without considering potential connections and trade-offs between them. In this contribution, we aim to bridge this gap by presenting an overarching design framework for congestion management mechanisms. We classify proposals based on design choices and qualitatively discuss their benefits and risks based on an extensive literature analysis. As there is no one-size-fits-all solution, we map possible risks and discuss the pros and cons of different mechanisms for various problem types. We caution against using market-based mechanisms for local congestion, as they can be susceptible to undesired strategic behavior of market actors.