BEUC: Risks and benefits of dynamic electricity pricing

Commissioned by BEUC (The European Consumer Organisation), the study estimates the monthly, quarterly, and annual electricity costs for an archetype household in Austria and France, under varying conditions and use cases.

The study also explores the differential impact of managed use with a dynamic price contract, assuming that electric vehicle (EV) charging, washing, dishwashing and tumble drying is carried out when the electricity price is lowest in the day. Finally, broad policy implications are formulated for price regulation and for electricity cost simulations for households.

An online interactive dashboard with the results can be accessed here.

Key findings:

• The main benefit from dynamic pricing occurs when variable prices are on average lower than the fixed price throughout the year, or otherwise put, when the fixed price is higher than the average variable price. The estimates for 2021 illustrate that when variable prices are unexpectedly higher than fixed prices for a sustained amount of time, this can lead to considerably higher electricity costs for households.
• Benefits from managing electricity consumption of flexible activities are relatively minor, mainly due to the small share of electricity consumption from flexible activities to the total bill – less than 30% of total electricity consumption by the archetype household.
• EV charging represents the highest cost within the flexible electricity consuming households’ activities, suggesting that dynamic pricing is most relevant to those households owning an EV and smart EV charging could lead to savings for those households.
• Among all electricity consuming household activities, space heating represents the highest cost. This is followed by the use of other appliances, electric vehicle charging and water heating.