UCD Energy Institute responds to consultation on dynamic electricity price tariffs by the Commission for Regulation of Utilities (CRU)
The UCD Energy Institute (EI) has submitted a (opens in a new window)response to a consultation paper on Dynamic Electricity Price Tariffs prepared by the Commission for Regulation of Utilities (CRU).
Dynamic electricity price tariffs are present when the price for electricity varies throughout the day and the price changes reflect the wholesale market price.
The CRU, in their paper, proposed that suppliers with more than 200,000 electricity customers be required to offer a “Standard Dynamic Price Contract”.
In its response to the consultation, UCD EI noted that dynamic pricing of retail electricity is “a step forward in the direction of improving economic efficiency, promoting variable renewable generation sources, and providing choice to customers.”
However, the actual scale and speed of dynamic tariffs should take into account differences in households' behaviour and circumstances, UCD EI pointed out. Therefore, the CRU’s current proposal will have to be supplemented by empirical research on decision-making in a household context, it noted.
“When it comes to developing effective and fair dynamic electricity prices, we need to take into account behavioural economics in understanding the impact of heterogeneous levels of heat pumps, electric vehicles, and solar PV in households on decision making and electricity use,” said Prof Lisa Ryan, Professor in Energy Economics in UCD’s School of Economics, and member of the UCD Energy Institute and NexSys (Next Generation Energy Systems) partnership programme.
“As humans, we do not make decisions solely based on cost, and any policy initiatives that seek to promote a particular type of customer response need to consider the variety in residential energy conservation behaviours situated in different contexts,” she added.
These comments are based on UCD EI’s research and expertise in the area of sustainable energy policies that should not only be economically efficient but also promote the fair, just and equitable transition of Ireland’s energy ecosystems to meet carbon emission targets and advance welfare of society.
UCD EI is Ireland’s leading research institute focused on decarbonisation of Ireland’s energy systems. It brings together researchers from a wide range of academic disciplines to tackle the challenges associated with decarbonisation of energy systems. In the past, UCD EI has offered its views on a wide range of Ireland’s sustainable energy systems transition policies and schemes.
The lead contributor in the preparation of this response was Pranay Kumar, a researcher on the NexSys SFI Strategic Partnership Programme. Other contributors included John Doody (HEA funded project), Damian Flynn (UCD/NexSys/EMPowER), Na Li, Ciarán MacDomhnaill (NexSys), Lisa Ryan (UCD/NexSys/EMPowER, Nadiya Saba (NexSys), and Joseph Wheatley (EMPowER). The work has been financed by the Science Foundation Grant no. 21/SPP/3756 (NexSys partnership) and the Department of Energy Communications and Climate.
Further information
UCD Energy Institute: https://www.ucd.ie/energy/
The CRU proposal is available (opens in a new window)here.
UCD EI’s response to the CRU proposal is available here.
NexSys website: (opens in a new window)www.nexsys-energy.ie