ANEEL SEMINAR ON DISTRIBUTED ENERGY RESOURCES
Brasilia, DF, Brazil
June 21, 2018
Ashley C. Brown
Executive Director, Harvard Electricity Policy Group
Harvard Kennedy School
In this paper we propose a method for the allocation of fixed (capital and non-variable operation and maintenance) costs at the medium voltage (MV) distribution level. The method is derived from the philosophy behind the widely used MW- mile methodology for transmission networks that bases fixed cost allocations on the “extent of use” that is derived from load flows. We calculate the “extent of use” by multiplying the total consumption or generation at a busbar by the marginal current variations, or power to current distribution factors (PIDFs) that an increment of active and reactive power consumed, or generated in the case of distributed generation, at each busbar, produces in each circuit. These PIDFs are analogous to power transfer distribution factors (PTDFs).
Unlike traditional tariff designs that average fixed costs on a per kWh basis across all customers, the proposed method provides more cost reflective price signals and helps eliminate possible cross-subsidies that deter profitable (in the case of competition) or cost-effective (in the case of a fully regulated industry) deployment of DG by directly accounting for use and location in the allocation of fixed costs. An application of this method for a rural radial distribution network is presented.
The essay sets out what electric markets might look like if the pricing proposed in value of solar studies were adopted for every resource.