Expansion of Distributed Generation and its Impacts on the Tariff Design of Electricity Distribution

Understanding consumption behavior is a fundamental step in operation and planning of distribution systems, as well as in determining the tariffs to be charged to consumers. The definition of tariffs that reflect the cost of the service provided – cost-reflective tariffs – necessarily involves allocating costs among consumer segments. This allocation is based on standard load curves defined during the tariff review processes of distribution companies. In this context, the rapid growth of distributed generation has posed a significant challenge for regulators and system operators, as distribution load curves have been changing quite significantly. The massive integration of distributed generation, particularly from solar photovoltaic sources, impacts load curves and, consequently, the allocation of regulated costs among segments through the tariff structure. Thus, this paper aims to explore the relationship between the expansion of distributed generation and its impact on the load curve of distribution companies, with consequences for tariff design. We conclude that there is a need to update the regulatory framework for calculating distribution tariffs in order to address the new load dynamics observed in distribution systems.