Time-of-use Tariffs

Introduction

Time-of-use (ToU) tariffs are a demand-side management strategy where electricity prices vary at different times of the day to encourage consumers to shift their usage to off-peak periods. This approach aims to balance electricity demand, reduce peak load, and promote energy efficiency.

Key Insights

Consumer Acceptance and Behavior:
- A significant portion of consumers are willing to adopt ToU tariffs, with studies showing that about 70% of respondents would choose a ToU tariff and shift their electricity demand, leading to reduced peak-time energy demand .
- Loss-aversion significantly impacts consumer willingness to switch to ToU tariffs, with loss-averse individuals being less likely to adopt these tariffs.
Economic and Environmental Benefits:
- ToU tariffs can lead to substantial savings in electricity generation costs and reduce the need for investments in costly and CO2-intensive power plants .
- Properly designed ToU tariffs can create a win-win situation where both producers increase profits and consumers save on electricity costs.
Distributional Effects:
- The financial impact of ToU tariffs varies across different socio-demographic groups. High-income households and those with flexible schedules tend to benefit more from ToU tariffs.
- Regional differences also play a role, with some areas experiencing more positive effects than others.
Adoption Rates and Strategies:
- Opt-in enrollment for ToU tariffs results in low uptake (as low as 1%), whereas opt-out enrollment can approach 100% adoption.
- Real-time pricing tariffs are less popular compared to static ToU tariffs with fixed peak and off-peak rates.
Load Shifting and Peak Demand:
- ToU tariffs effectively shift electricity demand from peak to off-peak periods, although challenges remain in addressing evening peak loads .
- The introduction of ToU tariffs can lead to higher overall electricity consumption but lower payments by consumers due to the shifting of usage to off-peak times.
Electric Vehicle Charging:
- ToU tariffs are particularly beneficial for managing the growing residential electric vehicle charging load, helping to balance grid demand and promote low-carbon power grids.

Conclusion

Time-of-use tariffs present a promising strategy for managing electricity demand, reducing peak loads, and promoting energy efficiency. While consumer acceptance varies, strategies such as opt-out enrollment and targeted marketing can enhance adoption rates. The economic and environmental benefits, along with the potential for significant load shifting, make ToU tariffs a valuable tool in modern energy management. However, careful consideration of socio-demographic impacts and regional differences is essential for equitable implementation.

Summary

Not a yes or no question

Introduction

Key Insights

Conclusion

Sources and full results

Time-of-Use Tariff Design Under Uncertainty in Price-Elasticities of Electricity Demand: A Stochastic Optimization Approach

Distributional effects of Time of Use tariffs based on electricity demand and time use

Consumers’ Willingness to Accept Time-of-Use Tariffs for Shifting Electricity Demand

Consumer demand for time of use electricity tariffs: A systematized review of the empirical evidence

Price-based demand side management: Assessing the impacts of time-of-use tariffs on residential electricity demand and peak shifting in Northern Italy

Are consumers willing to switch to smart time of use electricity tariffs? The importance of loss-aversion and electric vehicle ownership

Electricity time-of-use tariff with consumer behavior consideration

Multiobjective Model of Time-of-Use and Stepwise Power Tariff for Residential Consumers in Regulated Power Markets

Why Have Voluntary Time‐of‐Use Tariffs Fallen Short in the Residential Sector?

Method to Pre-evaluate the benefits of Time-of-use Tariff on Residential Electric Vehicle Charging Loads

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