Time-based pricing and electricity demand response: Existing barriers and next steps

Cherrelle Eid, Elta Koliou, Mercedes Valles, Javier Reneses and Rudi Hakvoort

Utilities Policy, 2016, vol. 40, issue C, 15-25

Abstract: Interest in Demand Response (DR) is increasing due to its potential to improve reliability and save costs for electricity systems. DR can provide a sustainable and cost-effective option for supply balancing, especially in a scenario with more volatile inflows from renewable energy sources. End-users can be incentivized to provide DR through time-based pricing in general and dynamic pricing in particular. This paper provides a theoretic framework and practice-oriented review of the status of DR in Europe, outlining the major challenges currently hampering further DR development. Important challenges involve the split-incentive issue for investments in enabling technologies, traditional market rules for flexibility that favor large generation units and the need for electricity market and network operation coordination.

Keywords: Smart grid; Demand side management; Tariffs (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (81)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:40:y:2016:i:c:p:15-25

DOI: 10.1016/j.jup.2016.04.001

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