Time-based pricing and electricity demand response: existing barriers and next steps

C. Eid, E. Koliou, M. Vallés, J. Reneses, R.A. Hakvoort

Utilities Policy Vol. 40, pp. 15 - 25

Summary:

Interest in Demand Response (DR) is increasing due to its potential to improve reliability and save costs for electricity systems. DR can provide a sustainable and cost-effective option for supply balancing, especially in a scenario with more volatile inflows from renewable energy sources. End-users can be incentivized to provide DR through time-based pricing in general and dynamic pricing in particular. This paper provides a theoretic framework and practice-oriented review of the status of DR in Europe, outlining the major challenges currently hampering further DR development. Important challenges involve the split-incentive issue for investments in enabling technologies, traditional market rules for flexibility that favor large generation units and the need for electricity market and network operation coordination.

Keywords: Smart grid; Demand side management; Tariffs

JCR Impact Factor and WoS quartile: 1,682 - Q2 (2016); 3,800 - Q2 (2023)

DOI reference: https://doi.org/10.1016/j.jup.2016.04.001

Published on paper: June 2016.

Published on-line: April 2016.

Citation:
C. Eid, E. Koliou, M. Vallés, J. Reneses, R.A. Hakvoort, Time-based pricing and electricity demand response: existing barriers and next steps. Utilities Policy. Vol. 40, pp. 15 - 25, June 2016. [Online: April 2016]