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New rate structures required!

Rafael Herzberg's picture
Consultant energy affairs Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

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New rate structures required!

The current tariff system was conceived many decades ago and has worked very well for centralized systems.

With distributed generation, especially from renewable sources, I present a suggestion to face the new challenges, based on two pillars:

1. Charge a monthly value t per kW demand

This portion reflects the main cost of the electricity sector, which is the amortization of the capital invested in infrastructure (generation, transmission and distribution)

2. Charge a variable amount per kWh of fuel

This portion reflects the dispatch of thermal power plants because national demand when only the renewable cannot meet all the market needs, and are known in Brazil as "tariff flags".

In this framework, a residential, commercial, industrial or institutional customer will pay an amount proportional to the demand and IF the tariff flag is activated, there will still be a portion proportional to the energy consumed in that specific month.

In this new format, the backup cost is "embedded" in the tariffs structure , which is so important for the feasibility of intermittent sources that are gaining popularity and taste around the world.

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Thank Rafael for the Post!
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