Dynamic Electricity Pricing & End-user Behaviour

1. Dynamic Electricity Pricing & End-user Behaviour Workshop 08 April 2014 Yuliya Voytenko, yuliya.voytenko@iiiee.lu.se

2. Our electricity consumption is determined by: • #1 - number of people in a household • #2 - income of a household • #3 - size of a household • Age and education - only to a small degree • Living with more people is more energy efficient • Detached houses of the same size and income - huge variations in the electricity consumption (Gram-Hanssen 2011) • Household size + income = only 1/3of differences in electricity consumption (Gram-Hanssen 2011) • 40% are explained by lifestylefactors(Sanquist et al 2012) Yuliya Voytenko

3. One way to influence – Dynamic Pricing Different electricity tariffs - time of a day, day of a week, season  less energy use in peak hours, no need to extend the grid  cost reduction • Pricing mechanisms: • Time of Use (ToU) pricing – time of a day • Critical Peak Pricing (CPP) – year-round (a ”stick”), high tariffs at critical peak hours • Crtitical Peak Rebate (CPR) – year-round (”a carrot”), refunding for the end-user • Real Time Pricing – the price is tied to the wholesale market price; smart appliances • Inclining Block Rate (IBR) – the rate grows with increased consumption • Most schemes focus on shifting the demand to off-peak periods while some aim for overall reduction in electricity use (e.g. IBR) Yuliya Voytenko

4. Dynamic pricing package • A pricing mechanism • A supportive technology • A feedback The more elements are used in each category, the higher is the user response But this is not the most cost-efficient  A CORRECT MIX is crucial Yuliya Voytenko

5. A sticker example Yuliya Voytenko

6. Consumer specificity • It is short-sighted to suggest dynamic pricing in ”one fits all” package • Consumers and their behaviour are different Yuliya Voytenko

7. Consumer behaviour spectrum CPP, CPR, RTP target here Easier ToU target here More difficult (Breukers, Mourik 2013) Important are changes in routines! Unconscious routines can be changed by making them conscious first, after which an intentional behavioral change is possible Yuliya Voytenko

8. Our electricity consumption is determined by: Attitude, motivation, awareness, capabilities, behaviours Socio-demographic variables House-related characteristics Appliances Presence patterns Household dynamics: timing and flexible use

9. Lifestyle end-user segments (1) Sütterlin et al 2011 Yuliya Voytenko

10. Lifestyle end-user segments (2) Sütterlin et al 2011 Yuliya Voytenko

11. Important to remember… • Financial incentives do not always determine consumer behaviour Yuliya Voytenko

12. References Breukers, S., Mourik, R. 2013. End-user engagement for flexible energy consumption patterns, In-Context Workshop, Rotterdam Lindskoug, S. 2006. Consumer reactions to peak prices. Elforsk raport 06:40. June 2006 Gram-Hanssen, K. 2011. Households' energy use – which is the more important: efficient technologies or user practices? World Renewable Energy Congress 2011 Sweden; 8-13 May Linköping, Sweden Sanquist, T. F.; Orr, H.; Shui, B.; Bittner, A.C. 2012 Lifestyle factors in U.S. residential electricity consumption. Energy Policy 42, 354-364 Sütterlin, B., Brunner, T. , Siegrist, M. 2011 Who puts the most energy into energy conservation? A segmentation of energy consumers based on energy-related behavioral characteristics. Energy Policy 39: 8137–8152

13. THANK YOU !!! YuliyaVoytenko: yuliya.voytenko@iiiee.lu.se