August 3, 2018 Read More →

EU regulatory shift has electricity-usage behavior changing by 2020

Reuters:

Most utilities have long offered cheaper night-time tariffs, but new EU rules expected in 2020 will require them to provide more flexible options that encourage customers to use power during sunny or windy periods, at varied times of day or when businesses are shut at weekends.

These kind of flexible “dynamic pricing” contracts are already widely offered in Spain and Scandinavia. But utilities in some of the biggest European markets like Britain and France are now beginning to follow suit in a shift that analysts say could disrupt the continent’s electricity retailing industry.

The nascent drive is enabled by the mass rollout of smart meters, which can precisely record energy usage patterns.

“From now on, consumers in Europe will be able to seize more spot market opportunities as the rise of renewable power and the availability of smart meters and internet-connected appliances boost dynamic pricing,” said Jean-Marc Ollagnier, group CEO of consultancy Accenture Resources.

Newer, smaller players are offering the most experimental tariffs, selling power in hourly or even half-hourly slots tied to wholesale spot prices. The big, traditional utilities like EDF (EDF.PA) and Centrica (CNA.L) are responding more gradually by offering variable time-pricing options.

Klaus-Dieter Borchardt, director Internal Energy Market at the European Commission, the EU’s executive, says variable pricing could cut power bills for a household by up to 400 euros ($470) a year.

It is early days in Europe, and in other developed power markets such as the United States and Australia. Utilities largely sell at fixed prices, regardless of wholesale swings or time of usage, and dynamic pricing accounts for a fraction of the market – but it is growing.

The number of customers on dynamic pricing rates globally is expected to rise from 4.5 million in 2018 to 75 million by 2025, of which 15 million will be in Europe, according to Navigant Research analyst Brett Feldman.

Experts say automation will be crucial for take-up.

More: Run your dishwasher when the sun shines: dynamic power pricing grows

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