Modelling Time-of-Use Electricity Tariffs for Tamil Nadu

Integration of renewable energy is crucial for India to meet its climate targets, including the goal of achieving net zero emissions by 2070. As the power sector is dependent on fossil fuel consumption, it is expected to witness a substantial increase in renewable energy integration in the future. Additionally, India is projected to experience rising demand for electricity. To ensure grid stability in the future with a higher share of renewable energy in the energy mix, effective demand-side management strategies are essential.

Time-varying rates or ToU tariffs are recognised globally, as an important Demand Side Management (DSM) measure. ToU tariffs are typically used to reduce the demand on the system during peak hours. ToU tariffs reflect the time-varying nature of electricity costs more accurately when compared with flat rates.

This report evaluates the impact of different time of use (ToU) tariff designs on key grid management parameters for the Tamil Nadu grid in the year 2024. The objective is to examine how the provision of static price signals in the form of ToU tariffs, prompts consumers to shift electricity demand to another time slot or reduce electricity usage and how this can facilitate the integration of a higher renewable energy share. 27 different ToU tariff designs were evaluated. A share of 17% wind energy and 11% solar energy was assumed for the ToU tariff design simulation. Key insights presented here may only apply to Tamil Nadu with its yearly energy demand peaking consistently in the early afternoon hours of April.

The results highlight the importance of optimally defining the time slots of peak and off-peak hours to reduce peak load instances and curtailment of renewables. Shifting the peak hours’ time slot from the current 6:00h to 10:00h and 18:00h to 22:00h to the alternative 5:00h to 7:00h and 17:00h to 23:00h shows improvements in some key parameters such as a reduction in peak load instances on the gross and net load. Along with the shifting peak hours, introducing a tariff rebate during the solar energy generation hours (solar sponge) from 10:00h to 16:00h has shown to be effective in reducing peak load magnitudes and shifting peak hours. This will encourage consumers to distribute their load away from traditional peak hours, resulting in smoother load distribution throughout the day. This has significant implications for grid stability and reliability. It has been most effective in reducing the instances of negative load and lower load instances which can be equated with the need for curtailment. Adjusting the peak hour tariff and altering the peak hours will have noticeable effects on load distribution and peak load occurrences.

The results indicate that a 25% increase in peak-hour tariffs outperforms a more aggressive increase in the tune of 40%. It was found that a 40% increase in peak hour tariff may create new peak load instances in the hours before or after. Off-peak rebates of 5% and 10% were simulated for the late night and early morning hours it was found that their impact was negligible.

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