Combined Peak Reduction and Self-Consumption Using Proximal Policy Optimization

Due to their decentralised and intermittent nature, market and tariff designs are challenged. In the Flemish region of Belgium the energy regulator (VREG) has recently announced a change of distribution fee design [28]. Previously, Flemish residential electricity distribution fees have been energy-based. The rise of residential photovoltaic (PV) installations and netmetering meant a reduction in income for the Distribution Network Operator (DNO). With the introduction of digital metering, the regulator takes the opportunity to introduce a capacity tariff, starting from 2023 [28]. The regulator motivates its decision by arguing that the DNO's main costs are capacity-based rather than energy-based [28]. As a result, a more cost-reflective price signal is provided to consumers. At the same time, by tying the distribution grid fees to power rather than energy consumption, the VREG encourages consumers, aiming to minizime cost, to reduce their peak power consumption. This causes an interesting application for Demand Response (DR), which we will consider in this work.