Quantify Avoidable Grid-Reinforcement Capacity

Determine how much transformer and cable capacity would be unnecessarily built when grid-reinforcement decisions rely on exogenous-price simulations rather than simulations that incorporate wholesale-price feedback from price-responsive home batteries.

Background

The paper argues that simulations using exogenous wholesale prices overstate the coincident local-grid peaks created by optimized home batteries. In the paper’s endogenous-price simulations, wholesale prices adjust to aggregate battery charging and discharging, substantially reducing the resulting local import and export peaks relative to the exogenous-price case.

Because grid-planning decisions are based on estimated peak loading, ignoring wholesale-price feedback may lead to unnecessary transformer and cable reinforcement. The paper identifies quantifying the resulting overbuilding as an unresolved issue for future research, motivated by the potentially substantial size of the omitted-feedback bias.