Energy Forum: fixed tariffs are becoming the most expensive option. Time for dynamic pricing?

Using fixed energy tariffs is slowly becoming the most expensive offer on the market – said Tobiasz Adamczewski, vice-president of Forum Energii. In his opinion, dynamic tariffs may become a real way to reduce bills for many households.

Forum Energii experts in the latest report entitled “Dynamic tariffs. How to reduce electricity bills?” pointed out that while wholesale electricity prices are falling thanks to, among others, development of renewable sources, the costs of energy distribution and maintaining the necessary capacity in the system are increasing. “As a result, consumers do not gain lasting protection against rising energy costs, which may translate into higher bills,” they said.

The Energy Forum indicates that one of the activities responding to these challenges is the popularization of the use of dynamic tariffs, which realistically reflect the operating conditions of the power system.

“The use of fixed tariffs is slowly becoming the most expensive offer on the market. For many households, dynamic tariffs can become a real way to reduce bills while relieving the energy system,” emphasized Tobiasz Adamczewski, vice-president of Forum Energii.

The authors of the report indicated that combining a dynamic energy price with a dynamic distribution tariff would increase the potential for savings. However, they emphasized that distribution system operators are currently not obliged to offer dynamic tariffs. They emphasized that the cost of energy distribution is the second largest element of the electricity bill.

Experts reminded that in dynamic tariffs, energy prices change every hour (and, according to the planned future change, every 15 minutes) depending on the balance of supply and demand on the energy market. They pointed out that thanks to the growing number of photovoltaic and wind installations, moments with very low wholesale energy prices are becoming more frequent. “Customers who are able to shift part of their consumption to such hours use energy when it is cheapest, which is why they pay less than customers with standard G11 or G12 tariffs,” they noted.

Forum Energii's analysis showed that the scale of savings depends on the consumption profile, technologies used in a given household (e.g. heat pump, electric car, energy storage) and the possibility of automatically controlling the operation of devices.

According to experts, the introduction of dynamic tariffs on a large scale may also significantly reduce the load on the electricity system. They emphasized that shifting even a small part of consumption from the peak of energy demand to hours of high RES production allows to reduce balancing costs, limit the operation of expensive conventional power plants and reduce the pressure on the construction of new gas units or large energy storage facilities.

They also pointed out that it is equally important to establish maximum price limits (energy – PAP), which will protect customers against unforeseen cost increases, and to create conditions for selling energy from home storage facilities or electric cars, which would increase local flexibility (of the power system – PAP) and reduce system balancing costs.

The authors of the report also draw attention to the possibility of supporting investments in energy storage regardless of having a photovoltaic installation and the urgent need to make detailed measurement data available to consumers. In the opinion of Forum Energii, access to such information, combined with a modern comparison of available offers, would enable customers to realistically assess the profitability of various settlement models and make informed decisions.

According to experts, an additional impulse will be the possibility of having more than one electricity contract using a submeter, and a real change would be the introduction of dynamic tariffs as default for devices with the highest consumption (such as heat pumps or car chargers). (PAP)

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