Impact of dynamic grid tariffs on grid-connected storage dispatch and revenues

Dynamic electricity tariffs are increasingly recognized as essential tools for enhancing energy flexibility by incentivizing energy flexibility. In response to this shift, particularly in some European bidding zones, this study examines how the operation and revenues of grid connected storage change if—flat, proportional, and piecewise—are applied. We have developed a Mixed Integer Quadratic Programming (MIQP) optimization model that integrates new, load-dependent tariff structures , which are relatively unexplored in existing literature. Using German Day-Ahead spot prices and load data from 2015 to 2023, we have assessed the effects of the ex-ante and ex-post calculation of each tariff design on storage dispatch and perform a sensitivity analysis on key tariff parameters. Our findings show that flat tariffs discourage storage use by penalizing efficiency losses, while both proportional and piecewise tariffs increase price volatility, enabling greater arbitrage opportunities and enhancing storage revenues. Notably, the piecewise tariff structure, despite a reduction in total energy exchanged compared to the no-tariff case, achieves the highest revenue increase, while providing incentives that are more aligned with system efficiency by mitigating peak load. Furthermore, we underscore the importance of setting an optimal threshold capacity and weighting variable tariff components, which significantly boost storage revenues. Additionally, while ex-ante tariff settings can result in rebound peaks that risk grid stability, ex-post tariffs mitigate this issue by encouraging a smoother dispatch pattern, particularly with piecewise tariff. Based on our results, we conclude that ex-post load-dependent tariffs provide an effective mechanism to incentivize energy storage adoption for power grid. • Dynamics tariffs enhance arbitrage opportunities and storage revenues. • Optimizing threshold capacity and tariff weighting further boosts storage gains. • Ex-ante tariffs trigger rebound peaks, posing risks to grid stability. • Ex-post tariffs smooth dispatch patterns but require accurate forecasting.