DER Pricing Power in the Presence of Multi-Location Consumers with Load Migration Capabilities

Abstract: Renewable distributed energy resources (DERs) have the potential to provide multi-location electricity consumers (MLECs) with electricity at prices lower than those offered by the grid using behind-the-meter advantages. This study examines the pricing power of such DER owners in a local environment with few competitors and how it depends on the MLEC's ability to migrate a portion of the load between locations. We simulate a dynamic game between an MLEC and the local DER owners, where the MLEC is modeled as a cost-minimizer and the DER owners as strategic profit maximizers. We show that, when the MLEC is inflexible, the DER owners' optimal behavior is to offer their electricity close to maximal prices, that is, at the grid price level. However, when the MLEC can migrate a fraction of the load to the other locations, the prices offered by the DER owners quickly decrease to the minimum level, that is, the DERs' grid feed-in tariffs quickly decrease to a lower level, depending on the load migration capability.