Activating the potential of decentralized flexibility and energy resources to increase the EV hosting capacity: A case study of a multi-stakeholder local electricity system in Norway

Abstract The increasing amount of flexible load in the energy system represents both a challenge and an opportunity. One primary source of load growth is the electrification of the transport sector and the subsequent charging of electric vehicles, which is a load type that can potentially adjust their load profiles. However, to activate the full potential of end-user flexibility, it is necessary to develop pricing mechanisms that can promote efficient load responses on a larger scale. In this paper, a trading mechanism is proposed and analysed within a capacity-based grid tariff scheme by formulating a game-theoretic framework that includes decentralized decision-making by self-interest pursuing end-users. The model is applied to a real-world case in Norway, and it is demonstrated how electrification of vehicles can be achieved with the existing infrastructure. It is found that capacity-based grid tariffs have a limited ability to reduce the coincident peak load in the system since they mainly incentivize individual peak load reductions. However, by including a capacity trading mechanism within the capacity-based tariff structure, we demonstrate that it is possible to increase the value of flexibility since the flexible end-users are incentivized to coordinate their flexibility dispatch with other stakeholders.