A valutation of electricity distribution capacity

Abstract

Predictions of future load developments at distribution level of the Dutch electricity network show that demands of especially electric vehicles and heat pumps rather than solar panels or micro combined heat and power have the potential to cause stability issues in the grid. Options to solve those issues could either decrease the demand by demand response, or they could increase the grid capacity by cables and transformers with a larger capacity, a micro CHP or a local battery. To reveal which option has the most potential a comparison has be done on a basis of costs and welfare effects for different future electricity peak scenario's. Results show that the installation of additional cable and transformer capacity is often the most cost-effective, while providing a high degree of operational certainty and an attractive technical lifespan. Also deadweight losses are avoided. Demand response could also be an attractive option, especially for smaller peaks and - more importantly - at common peak price elasticities of 0.6 or higher as costs and deadweight loss have acceptable levels compared to the other options. If consumer response is low and thus elasticities become small, the deadweight loss of this option rapidly increases. Elasticity figures are not very certain, therefore demand response is also seen as rather risky.