Proposing Dynamic Pricing as an Alternative to Improve Technical and Economic Conditions in Rural Electrification: A Case Study from Colombia

Dahiana López García (), José David Beltrán Gallego and Sandra Ximena Carvajal Quintero
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Dahiana López García: Department of Electrical, Electronic and Computer Engineering, Faculty of Engineering and Architecture, Universidad Nacional de Colombia, Manizales 170008, Colombia
José David Beltrán Gallego: Department of Electrical, Electronic and Computer Engineering, Faculty of Engineering and Architecture, Universidad Nacional de Colombia, Manizales 170008, Colombia
Sandra Ximena Carvajal Quintero: Department of Electrical, Electronic and Computer Engineering, Faculty of Engineering and Architecture, Universidad Nacional de Colombia, Manizales 170008, Colombia

Sustainability, 2023, vol. 15, issue 10, 1-24

Abstract: Electricity access in rural areas is a critical challenge for global electrification. Most countries have focused on increasing electricity coverage without assessing the long-term sustainability of such solutions. To achieve sustainability in rural electrification solutions, it is necessary to consider five dimensions: technical, environmental, economic, social, and institutional. This paper reviews the state of rural electrification worldwide and proposes a dynamic tariff scheme that increases the technical and economic conditions of implemented solutions over an extended period. The proposed time-of-use (TOU) pricing methodology aims to flatten the system demand curve and utilize on-site renewable energy potentials. For the methodology’s evaluation, we analyzed a case study focused on electrification in isolated areas of Colombia, conducting a sensitivity analysis of user-behavior to the proposed tariff scheme using the concept of price elasticity of demand. We also evaluated the effect of the achieved demand curve flattening on the system frequency. The identified benefits highlight that an accurate pricing scheme can reduce the variation range in the system frequency. Furthermore, the evaluation results show that the implementation of the proposed tariff scheme has the potential to significantly flatten the demand curve and encourage the connection of non-conventional renewable sources to improve network conditions.

Keywords: rural electrification; sustainability; demand response; dynamic pricing; time-of-use (TOU) (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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