DSO tariff structures: development options from stakeholders’ viewpoint

Abstract

Purpose

The purpose of the paper is to analyze the development needs and opportunities in the distribution system operators’ (DSO) tariff structures in the smart-grid environment.

Design/methodology/approach

The impacts of the distribution pricing schemes for the stakeholders and their requirements for the tariff structures are evaluated by qualitative analyses. Furthermore, there is a case analysis concerning the practical development possibilities of the DSO tariff structures in Finland.

Findings

Major finding of the paper is that the demand-based power band tariff is the optimal solution for the DSO pricing structure, when taking into account the real-life limitations and the requirements of the stakeholders.

Practical implications

Outcomes of the paper can be applied in practice in design of the pricing schemes in the electricity distribution. Incentive provision impacts and cost reflectivity of the DSO tariffs can be improved by implementing the suggested pricing structure.

Originality/value

The paper provides a novel viewpoint on the study of the DSO tariff design by considering the impacts of the pricing for the stakeholders and their requirements for tariff structure. Furthermore, the real-life limitations in the tariff design have been taken into account by analyzing the development options in Finland. Results are useful, especially for the DSOs, regulators and academics, who are working with the tariff development issues.

Citation

Honkapuro, S., Tuunanen, J., Valtonen, P. and Partanen, J. (2014), "DSO tariff structures: development options from stakeholders’ viewpoint", International Journal of Energy Sector Management, Vol. 8 No. 3, pp. 263-282. https://doi.org/10.1108/IJESM-08-2012-0005