Publication - Dynamic Retail Electricity Tariffs: Choices and Barriers
Dynamic Retail Electricity Tariffs: Choices and Barriers
Florence School of Regulation
Pradyumna Bhagwat, Samson Hadush
*Sixteen international case studies on the implementation of dynamic retail electricity tariffs are reviewed to identify the design and implementation choices that have to be made when introducing such tariffs.
- Two primary design choices are identified: 1) the time block length, which means the number of distinct tariff levels; and 2) the price periodicity, which is the time interval between revisions of the tariff. Time-of-use tariffs are widely used and they can be the first step in applying dynamic tariffs before moving to more advanced approaches such as real-time pricing.
- Two types of implementation choices are identified: 1) those made by the regulator regarding regulatory interventions to protect vulnerable customers; and 2) those made by consumers regarding whether to opt for a dynamic tariff and the selection of a suitable dynamic tariff option.
- The implementation of dynamic retail tariffs depends on the availability of physical and information and communication technology (ICT) infrastructure, the maturity of the power market
design and consumer behaviour.
- Before implementing dynamic tariffs, it is essential to conduct a careful cost-benefit analysis of the effects on consumers, suppliers and the overall implementation system. Moreover, enabling