Demanding, distributing and selling energy flexibility: How dynamic tariffs entered the Danish electricity market and what to do next

Anders Rhiger Hansen, Gianluca Trotta, Per Harboe Hoelgaard, Jonas Lund Andersen

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Dynamic electricity pricing, in which tariffs vary during the day, has gained more attention over recent decades. In Denmark, the expansion of renewable and fluctuating energy production, primarily in the form of wind power, has increased the need for energy demand flexibility, and with a full rollout of smart meters, dynamic electricity pricing appears as an apparent solution. However, a successful (further) implementation of time-varying electricity rates in Denmark depends on households adopting, accepting and acting on dynamic price signals.
The concept of energy flexibility plays an essential role here, but different actors emphasize different aspects of flexibility. For grid companies, who distribute electricity, flexibility is a way to limit or postpone investments. For retailers, who sell electricity, flexibility helps promote products and introduces cost-reflecting prices. Finally, for households, who demand energy, flexibility needs to reflect everyday rhythms and practices.
In this paper, we review the initial implementation of dynamic electricity pricing in Denmark. First, focusing on demanding energy flexibility, we describe the modest effect of dynamic pricing and the (modest) adoption of such products based on previous studies. Then, taking social and material contexts into account, we suggest that flexible practices better encapsulate energy demand flexibility rather than flexible consumers, and that price signals work through changing the meaning of household practices. Second, focusing on distributing and selling energy flexibility, we outline the role of grid companies and retailers, and include general descriptions of products on the market today.
Finally, we comment on the preliminary and future promotion of time-varying products as well as suggest recommendations for future energy policy and research on dynamic electricity pricing.
TitelECEEE Summer Study 2021
ForlagEuropean Council for an Energy Efficient Economy, ECEEE
StatusUdgivet - 2021