Location
Hilton Waikoloa Village, Hawaii
Event Website
https://hicss.hawaii.edu/
Start Date
7-1-2025 12:00 AM
End Date
10-1-2025 12:00 AM
Description
Electricity markets still struggle to leverage the flexibility potential of the demand side. Residential customers are either offered fixed tariffs, which do not provide incentives for shifting loads, or fully variable real-time tariffs, which expose them to strong price risks. We present a novel portfolio tariff that balances risk and reward. To assess the effectiveness of this tariff, we conducted simulations using real-world EPEX spot price data, evaluating its impact on different energy services with varying degrees of flexibility, including interruptible and non-interruptible loads. The simulations, driven by model predictive control, allow us to analyze load flexibility, tariff costs, and the risks associated with payment fluctuations. Our findings reveal that even with a small share of variable components in the portfolio tariff, significant flexibility can be unlocked. Customers benefit by substantially reducing their costs while being able to choose the level of risk they are comfortable with. Meanwhile, utility companies can better balance supply and demand and attract a new segment of more flexible customers.
Recommended Citation
Ameling, Justus and Gust, Gunther, "Risk and Reward: Portfolio-based Dynamic Electricity Tariffs for Leveraging Demand-side Flexibility" (2025). Hawaii International Conference on System Sciences 2025 (HICSS-58). 4.
https://aisel.aisnet.org/hicss-58/da/energy/4
Risk and Reward: Portfolio-based Dynamic Electricity Tariffs for Leveraging Demand-side Flexibility
Hilton Waikoloa Village, Hawaii
Electricity markets still struggle to leverage the flexibility potential of the demand side. Residential customers are either offered fixed tariffs, which do not provide incentives for shifting loads, or fully variable real-time tariffs, which expose them to strong price risks. We present a novel portfolio tariff that balances risk and reward. To assess the effectiveness of this tariff, we conducted simulations using real-world EPEX spot price data, evaluating its impact on different energy services with varying degrees of flexibility, including interruptible and non-interruptible loads. The simulations, driven by model predictive control, allow us to analyze load flexibility, tariff costs, and the risks associated with payment fluctuations. Our findings reveal that even with a small share of variable components in the portfolio tariff, significant flexibility can be unlocked. Customers benefit by substantially reducing their costs while being able to choose the level of risk they are comfortable with. Meanwhile, utility companies can better balance supply and demand and attract a new segment of more flexible customers.
https://aisel.aisnet.org/hicss-58/da/energy/4