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Locked in flat tariffs? An analysis of electricity retailers’ dynamic price offerings and attitudes to consumer engagement in demand response

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  • Numminen, Sini
  • Ruggiero, Salvatore
  • Jalas, Mikko

Abstract

Matching electricity supply and demand is crucial for deploying renewable energy sources. Tools such as dynamic and market-based pricing help engage energy end-users in this effort and enable demand response. Moving away from a predominant focus on the technical aspects of demand response, in this article, we explore dynamic pricing offerings in the light of energy democracy and retailers’ views on making electricity provision less inconspicuous. To this end, we examine the market offers of 59 Finnish electricity retailers, including their customer segmentation and understanding of the barriers to broader uptake of dynamic pricing. Our findings indicate that markets are in ferment; the electricity retailers are innovating and trialling new electricity products, but there are also significant concerns over vulnerable energy end-users. We also find evidence that a move towards more dynamic pricing is not a general trend. On the contrary, electricity retailers have diverse portfolios, and an increasing number of them promote products such as 'super-flat' tariffs, in which prices are detached from both the timing and volume of consumption. Dynamic pricing and transparency in energy balancing can contribute to increased energy literacy and energy democracy. However, current market offerings are not organised, and they are not developing in ways that would be conducive to the broad utilisation of these demand response tools among domestic end-users of electricity.

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  • Numminen, Sini & Ruggiero, Salvatore & Jalas, Mikko, 2022. "Locked in flat tariffs? An analysis of electricity retailers’ dynamic price offerings and attitudes to consumer engagement in demand response," Applied Energy, Elsevier, vol. 326(C).
    • Handle: RePEc:eee:appene:v:326:y:2022:i:c:s0306261922012594
    DOI: 10.1016/j.apenergy.2022.120002
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    References listed on IDEAS

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    2. Sheybanivaziri, Samaneh & Le Dréau, Jérôme & Kazmi, Hussain, 2024. "Forecasting price spikes in day-ahead electricity markets: techniques, challenges, and the road ahead," Discussion Papers 2024/1, Norwegian School of Economics, Department of Business and Management Science.

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