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

doi:10.1016/j.energy.2012.05.043

Energy

Volume 44, Issue 1, August 2012, Pages 576-583

https://doi.org/10.1016/j.energy.2012.05.043 Get rights and content

Abstract

One of the most common demand side management programs consists of time-of-use (TOU) tariffs, where consumers are charged differently depending on the time of the day when they make use of energy services. This paper assesses the impacts of TOU tariffs on a dataset of residential users from the Province of Trento in Northern Italy in terms of changes in electricity demand, price savings, peak load shifting and peak electricity demand at sub-station level. Findings highlight that TOU tariffs bring about higher average electricity consumption and lower payments by consumers. A significant level of load shifting takes place for morning peaks. However, issues with evening peaks are not resolved. Finally, TOU tariffs lead to increases in electricity demand for substations at peak time.

Highlights

► 1,099,839,168 quarter hour readings were downloaded from 1446 smart meters in the Trentino Province, Northern Italy. ► Following the introduction of TOU tariffs consumption increased by 13.69%. ► Consumers' electricity bills decreased by 2.21%. ► Peak load shifting took place for morning peaks and created a split in two peaks for evening periods. ► The majority of substations (75.6%) experienced an increase in electricity demand during peak periods.

Introduction

The recent diffusion of smart metering devices for residential consumers calls for research on how these can be integrated with price-based demand side management (DSM) programs. Price-based DSM programs, which are alternatives to flat tariffs, include critical peak pricing, extreme day pricing, real time pricing and time-of-use (TOU) tariffs [1]. The latter provide consumers with certainty about the price of consumption at different periods of the day, unlike other price-based DSM programs where the price fluctuates following the real time cost of electricity [2], [3]. This is a significant advantage, considering the risk-averse attitude to uncertainty on prices of most residential electricity users [4], [5]. Several studies investigated the relationship between TOU tariffs and energy consumption [6], [7], [8], [9], [10], [11]. Fewer studies have analyzed the relationship between electricity demand and load shifting impacts in connection with price-based DSM programs for residential users [12], [13].

This study assesses the electricity demand and load shifting impacts related to TOU tariffs. The specificity of this approach lies in the assessment of the impacts of TOU tariffs on electricity demand, price savings, peak load shifting and changes in electricity demand at sub-station level. The assessment is based on the comparison of time-related electricity consumption, prices and peak loads before and after the introduction of TOU tariffs from a dataset of residential consumers in the Province of Trento in Northern Italy. The comparability of the TOU and non-TOU (i.e. flat tariffs) samples is ensured by taking into account only data from the same seasons and controlling for weather temperatures.

The paper describes the main features of the TOU database from the Province of Trento (Section 2). It presents findings on impacts of TOU in terms of changes in electricity demand and price savings (Section 3), as well as changes in peak load shedding and demand for electricity substations (Section 4). It discusses findings (Section 5). It concludes by explaining some of the main policy implications of this research (Section 6).

Section snippets

Dataset on the Province of Trento

In Italy, TOU tariffs have gradually been applied to residential electricity users since the year 2010. The first pilot of TOU (tariffa bioraria) involved 4 million end-users. Lower tariffs are applied to weekends and to weekdays from 7.00 PM to 8.00 AM. The two tariffs (0.09982 cent/kWh and 0.07078 cent/kWh for peak and off-peak respectively) are designed to yield savings for end-users whose consumption is concentrated for more than 66% in correspondence with the lower tariff periods. The fact

Electricity demand

Average daily variations in electricity demand associated with consumers moving from flat tariffs to TOU can be calculated as the total sum of the area bounded between the TOU and flat tariffs demand curves. In principle, this could be determined as the integral of the two functions. However, since representing mathematical functions for these two curves is beyond the scope of this paper, the approach of linear interpolation is followed here for all available values. Interpolation would not be

Load shedding

The morning peak, which in year one typically occurred between 8.00 AM and 8.30 AM, is displaced under TOU by a new morning peak taking place between 6.45 AM and 7.15 AM. Hence, the introduction of differentiated tariffs triggers a significant load shed. What is more, both height and spikiness of the peak are mitigated thanks to TOU tariffs. Although this study does not feature qualitative data which might explain some of the causal relations between timing and use of appliances in the

Discussion of findings

Findings from 1,099,839,168 quarter hour readings downloaded from 1446 smart meters over two distinct years show that following the introduction of TOU tariffs (i) consumption increased by 13.69%; (ii) consumers' electricity bills decreased by 2.21%; (iii) peak load shedding occurred for morning peaks and created a split in two peaks for evening periods; and (iv) 75.6% of substations experienced an increase in electricity demand during peak periods.

There are atleast four implications to the

Conclusion

The non-voluntary participation to tariffa bioraria makes the results of this study particularly significant from a policy perspective as these provide evidence about the consequences of deploying large scale TOU as default tariffs. At the same time, the format of how the new tariff system was communicated to end-users through previous paper bills may not be sufficient to prevent problems with information. Other sources of information included a program in the local TV news, advertisements on

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

Abstract

Highlights

Introduction

Section snippets

Dataset on the Province of Trento

Electricity demand

Load shedding

Discussion of findings

Conclusion

Electric Power Systems Research

Energy Policy

Journal of Environmental Psychology

Resource and Energy Economics

Energy

Resource and Energy Economics

Energy

Energy Economics

Energy Policy

Energy

Energy Policy

Energy

Energy

International Journal of Forecasting

Building and Environment

Energy Policy

Energy Policy

Applied Energy

Applied Energy

Energy and Buildings

Applied Energy

Energy and Buildings

Energy and Buildings

Energy and Buildings

Energy Policy