From the Wires
The Brattle Group Estimates Additional euro 53 Billion in Savings Possible from Deployment of Smart Meters in the EU
By: PR Newswire
Oct. 12, 2009 06:00 AM
International experience shows that customer adoption rates for dynamic
tariffs can range from a low of 20 percent to a high of 80 percent depending
on program design. The authors estimate that if 80 percent of customers
reduce their demand at peak hours due to dynamic pricing, the reduction in
associated capacity and transmission costs would be
The paper identifies a number of barriers to customers choosing dynamic tariffs, including insufficient financial incentives, difficultly in estimating the benefits of switching to a dynamic tariff, risk-aversion and uncertainty about how to respond to dynamic prices. The authors point out that both policy-makers and energy suppliers need to be innovative in order to overcome these barriers. Quantifying and stressing the environmental benefits of dynamic tariffs, ensuring transparent and adequate financial rewards and offering customers a lower flat tariff in return for providing "automatic" demand response could help boost customer participation. For some Member States, setting a dynamic regulated tariff could significantly increase demand response. Countries without regulated tariffs could implement dynamic transmission and distribution tariffs that would vary according to when the customer uses power.
The report notes that adoption of dynamic tariffs could make or break the
payoff from the EU's investment in smart meters. The authors estimate the
costs of installing smart meters in the EU at
Brattle principal and dynamic pricing expert
Dr Faruqui and Mr Harris will present their findings at a seminar in
The discussion paper, "Unlocking the
The Brattle Group provides consulting services and expert testimony in economics and finance to corporations, law firms, and public agencies worldwide. Areas of expertise include antitrust and competition, valuation and damages, utility regulatory policy and ratemaking, and regulation and planning in network industries. For more information, please visit www.brattle.com.
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