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Investigating preferences for dynamic electricity tariffs: The effect of environmental and system benefit disclosure

Buryk, Stephen, Mead, Doug, Mourato, Susana and Torriti, Jacopo (2015) Investigating preferences for dynamic electricity tariffs: The effect of environmental and system benefit disclosure. Energy Policy, 80. pp. 190-195. ISSN 0301-4215

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Identification Number: 10.1016/j.enpol.2015.01.030

Abstract

Dynamic electricity pricing can produce efficiency gains in the electricity sector and help achieve energy policy goals such as increasing electric system reliability and supporting renewable energy deployment. Retail electric companies can offer dynamic pricing to residential electricity customers via smart meter-enabled tariffs that proxy the cost to procure electricity on the wholesale market. Current investments in the smart metering necessary to implement dynamic tariffs show policy makers’ resolve for enabling responsive demand and realizing its benefits. However, despite these benefits and the potential bill savings these tariffs can offer, adoption among residential customers remains at low levels. Using a choice experiment approach, this paper seeks to determine whether disclosing the environmental and system benefits of dynamic tariffs to residential customers can increase adoption. Although sampling and design issues preclude wide generalization, we found that our environmentally conscious respondents reduced their required discount to switch to dynamic tariffs around 10% in response to higher awareness of environmental and system benefits. The perception that shifting usage is easy to do also had a significant impact, indicating the potential importance of enabling technology. Perhaps the targeted communication strategy employed by this study is one way to increase adoption and achieve policy goals.

Item Type: Article
Official URL: http://www.sciencedirect.com/science/journal/03014...
Additional Information: © 2015 The Authors CC-BY-NC-ND 4.0
Divisions: Geography & Environment
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
Sets: Departments > Geography and Environment
Date Deposited: 15 Dec 2015 12:57
Last Modified: 20 Mar 2019 02:45
URI: http://eprints.lse.ac.uk/id/eprint/64710

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