Real-time electricity pricing for industrial customers: Survey and case studies in the United States

Nasim Nezamoddini and Yong Wang

Applied Energy, 2017, vol. 195, issue C, 1023-1037

Abstract: Electricity prices change substantially over time in the wholesale markets. The fluctuations are mainly caused by power grid states, fuel price fluctuations, and market conditions. Real-time pricing (RTP) is an effective way to reduce risks utility companies face from volatile electricity prices. RTP allows participating customers to reduce electric bills by changing use patterns. This paper analyzes the pricing components and characteristics of representative RTP programs for industrial customers based on publicly available information. Our main goal is to study the reasons behind their success and failure. Knowing the details about RTP programs increases customers' awareness of their advantages and assists them in deciding whether they should enroll. It also helps utility companies develop new programs or improve existing ones. Case studies in the manufacturing sector are presented and the savings of RTP are compared with another popular dynamic pricing program, time-of-use (TOU) pricing under different scenarios. The results show that the savings by switching from flat rates to TOU and RTP are highly program dependent. Eighteen out of the 35 base-case scenarios resulted in positive savings by switching to TOU, and 29 out of 35 base-case scenarios resulted in positive savings by switching to RTP.

Keywords: Real-time pricing; Time-of-use; Smart grid; Demand response; Manufacturing (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (20)

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DOI: 10.1016/j.apenergy.2017.03.102

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