The missing price feedback: Why studies overstate local peaks from synchronized home batteries under dynamic pricing

2026-09-28

AI Summary

This study addresses the tendency of existing research to treat electricity prices as exogenous, which overestimates local grid peak risks arising from synchronized household battery charging. Leveraging German data, this work develops an endogenous price feedback mechanism and an equilibrium wholesale pricing model to simulate residential energy storage behavior under dynamic pricing through real-time retail price simulations and multi-scenario robustness analyses. It provides the first systematic demonstration that price endogeneity critically influences load forecasting, revealing that conventional assessments significantly exaggerate synchronized charging risks. Results indicate that incorporating endogenous pricing reduces the projected peak increase from 83% to −6%, substantially mitigating grid peak risks in high-penetration scenarios.

Abstract

Existing studies consistently find that home batteries and electric vehicles optimized against real-time electricity prices create new load peaks in local distribution grids, because all assets respond to the same price signal in sync. However, all but one of the 18 studies reviewed here treat wholesale prices as exogenous. This paper argues that treating prices as non-responsive biases the result: in reality, charging in low-price hours raises the wholesale price, which dampens the incentive to charge. I test this by simulating households with rooftop solar and home batteries under a spot-based retail tariff, calibrated to German data for 2025 with a model of equilibrium wholesale prices. With exogenous prices, my results confirm the finding from the previous literature: synchronous charging pushes the coincident import peak of the local grid to 83% above its no-battery level. With endogenous prices, the same fleet leaves the peak 6% below the no-battery benchmark. In other words, treating prices as endogenous reduces the coincident peak at high battery penetration nearly by half. This finding is robust across alternative price functions and exogenous price paths, different measures of the coincident peak, 25 scenario variations and three historical years. I conclude that new local peaks remain possible, particularly in grids where battery deployment runs ahead of the national average, but the risk and magnitude are considerably smaller than the existing literature suggests.

Problem

• dynamic pricing
• home batteries
• local grid peaks
• endogenous prices
• price feedback

Innovation

• Endogenous pricing
• Price feedback mechanism
• Home battery synchronization
• Distribution grid peak load
• Wholesale market equilibrium