In this paper, I review the global experience with real-time pricing of electricity for households. Specifically, I share insights gleaned from my review of information from Denmark, Holland, Norway, Spain and the US (Illinois is the only state which offers RTP today to households). I discuss participation rates and impact of RTP on peak loads.
ABSTRACT
This paper reviews the international experience with real-time pricing of electricity for households. In the economics literature, real time pricing is regarded as the “best” form of pricing from the vantage point of maximizing economic efficiency. However, from a customer perspective, it has not found much traction in the U.S. or Canada. The widest deployment has been in Europe, where it has been offered by competitive retailers, but even there it is a relatively recent phenomenon. It is being tested by a network in Australia. In the paper, I compare the impact of real time pricing on peak demand with simpler forms of time-varying rates, such as critical-peak pricing and time-of-use rates.
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