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A Dynamic Pricing Approach on Electricity Prices in Indian Context

Author

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  • Desai, Kinnary R.
  • Dutta, Goutam

Abstract

In this paper, we study the mechanism of dynamic pricing of electricity and its opportunities in the Indian context. We compare the economic efficiency of dynamic pricing vis-à-vis the traditional flat tariff of electricity. We analyse various ways in which dynamic tariff can be introduced in the electricity market and we show the Indian experience in this regard. We consider the state of Maharashtra, in particular, to understand how TOD (Time of Day) pricing system has been introduced and how it is more efficient. We develop a mathematical model using pseudo-real data (as per the advice of a renowned sector expert) to show how TOD tariff is more efficient than flat tariff and how RTP (Real Time Pricing) tariff is associated with uncertainty of electricity bills. We further emphasise on how the dynamic pricing system can be modified in order to increase its efficiency.

Suggested Citation

  • Desai, Kinnary R. & Dutta, Goutam, 2013. "A Dynamic Pricing Approach on Electricity Prices in Indian Context," IIMA Working Papers WP2013-12-07, Indian Institute of Management Ahmedabad, Research and Publication Department.
    • Handle: RePEc:iim:iimawp:12793
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    Cited by:

    1. Dutta, Goutam & Mitra, Krishnendranath, 2015. "Dynamic Pricing of Electricity: A Survey of Related Research," IIMA Working Papers WP2015-08-03, Indian Institute of Management Ahmedabad, Research and Publication Department.
    2. Thanh Tam Ho & Sarana Shinkuma & Koji Shimada, 2018. "The Effects of Dynamic Pricing of Electric Power on Consumer Behavior: A Propensity Score Analysis for Empirical Study on Nushima Island, Japan," Energies, MDPI, vol. 11(8), pages 1-22, August.
    3. Krishnendranath Mitra & Goutam Dutta, 2021. "A novel method of market segmentation and market study for dynamic pricing of retail electricity in India: an experimental approach in a university setup," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(2), pages 162-184, April.
    4. Goutam Dutta & Krishnendranath Mitra, 2017. "A literature review on dynamic pricing of electricity," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(10), pages 1131-1145, October.
    5. Nidhi Kaikar & Goutam Dutta & Debamanyu Das & Subhashree Banerjee, 2021. "Time-of-use pricing of electricity in monopoly and oligopoly," OPSEARCH, Springer;Operational Research Society of India, vol. 58(1), pages 1-28, March.

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