Grid tariff designs to address electrification and their allocative impacts

This paper investigates volumetric grid tariff designs considering different pricing mechanisms and resulting in cost-allocative impacts across socio-techno-economic consumer categories. In a case study of 1.56 million Danish households divided into 90 socio-techno-economic categories, we compare three alternative grid tariffs and investigate their impact on annual electricity bills. The results of our design, consisting of a time-dependent threshold penalizing individual peak consumption and a system peak tariff, show (a) a range of different allocations that distribute the burden of additional grid costs across both technologies and (b) strong positive outcomes, including reduced expenses for lower-income groups and smaller households.