Fostering Residential Demand Response through Dynamic Pricing Schemes: A Behavioural Review of Smart Grid Pilots in Europe

Kris Kessels, Carolien Kraan, Ludwig Karg, Simone Maggiore, Pieter Valkering and Erik Laes
Additional contact information
Kris Kessels: VITO (Vlaamse Instelling voor Technologisch Onderzoek)/Energyville, Boeretang 200, 2400 Mol, Belgium
Carolien Kraan: ECN (Energieonderzoek Centrum Nederland), Westerduinweg 3, 1755 ZG Petten, The Netherlands
Ludwig Karg: BAUM Consult GmbH, Gotzinger Straße 48/50, 81371 München, Germany
Simone Maggiore: RSE SpA, Via Rubattino 54, 20134 Milan, Italy
Pieter Valkering: VITO (Vlaamse Instelling voor Technologisch Onderzoek)/Energyville, Boeretang 200, 2400 Mol, Belgium
Erik Laes: VITO (Vlaamse Instelling voor Technologisch Onderzoek)/Energyville, Boeretang 200, 2400 Mol, Belgium

Sustainability, 2016, vol. 8, issue 9, 1-21

Abstract: Many smart grid projects make use of dynamic pricing schemes aimed to motivate consumers to shift and/or decrease energy use. Based upon existing literature and analyses of current smart grid projects, this survey paper presents key lessons on how to encourage households to adjust energy end use by means of dynamic tariffs. The paper identifies four key hypotheses related to fostering demand response through dynamic tariff schemes and examines whether these hypotheses can be accepted or rejected based on a review of published findings from a range of European pilot projects. We conclude that dynamic pricing schemes have the power to adjust energy consumption behavior within households. In order to work effectively, the dynamic tariff should be simple to understand for the end users, with timely notifications of price changes, a considerable effect on their energy bill and, if the tariff is more complex, the burden for the consumer could be eased by introducing automated control. Although sometimes the mere introduction of a dynamic tariff has proven to be effective, often the success of the pricing scheme depends also on other factors influencing the behavior of end users. An important condition to make dynamic tariffs work is that the end users should be engaged with them.

Keywords: dynamic pricing; demand response; smart grid; consumer engagement (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:8:y:2016:i:9:p:929-:d:77976

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