Direct retail exposure to wholesale price makes a useful thought experiment, but consumers value price stability and are willing to pay retailers to take on the price risks. Exposing competitive retailers to wholesale spot price incentivizes them to offer efficiency and demand management tools to their customers.
Accurately costing and valuing the electricity System is a good early step moving toward a more efficient market.
Residential consumers aren't substantial users of electricity and lack both mechanisms to act and behavioral demand flexibility. Residential does however carry the cost of the distribution system. Exposing some limited volatility will open up automation service and VPP businesses to profitability. But it will also reduce the drive toward electrification, which is the greater social value and good.
Electricity isn't a market in the economics definition. Today Theory is only suggestive and there are numerous ways to get this wrong and many hidden counter incentives.
Although I do personally work toward advancing dynamic pricing. Specifically by technology enablement and sharing experiences across interested parties. Always interested in this conversation.
Interesting, in ZA we don't have dynamic pricing. We have blackouts, supply is curtailed (Eskom is broke), not because demand is going up in summer (the economy does not grow). In such an environment (high inequality, high unemployment, no growth), the better off get their solar panels (in order to escape the blackouts) and the poor stay in darkness..
Direct retail exposure to wholesale price makes a useful thought experiment, but consumers value price stability and are willing to pay retailers to take on the price risks. Exposing competitive retailers to wholesale spot price incentivizes them to offer efficiency and demand management tools to their customers.
Accurately costing and valuing the electricity System is a good early step moving toward a more efficient market.
Residential consumers aren't substantial users of electricity and lack both mechanisms to act and behavioral demand flexibility. Residential does however carry the cost of the distribution system. Exposing some limited volatility will open up automation service and VPP businesses to profitability. But it will also reduce the drive toward electrification, which is the greater social value and good.
Electricity isn't a market in the economics definition. Today Theory is only suggestive and there are numerous ways to get this wrong and many hidden counter incentives.
Although I do personally work toward advancing dynamic pricing. Specifically by technology enablement and sharing experiences across interested parties. Always interested in this conversation.
Interesting, in ZA we don't have dynamic pricing. We have blackouts, supply is curtailed (Eskom is broke), not because demand is going up in summer (the economy does not grow). In such an environment (high inequality, high unemployment, no growth), the better off get their solar panels (in order to escape the blackouts) and the poor stay in darkness..