Graz, October, 13rd - 14th 2014

Evaluation of the effects of a tariff change on the Italian residential customers subject to a

mandatory Time-of-Use tariff

Simone Maggiore

Summary

- Background; - ToU tariff experience in Italy - Effect of the tariff change on the load curves; - Effect of the tariff change on the consumption habits; - Results of the simulation with the software tool

SCUDO7; - Conclusions

Background

July, 1st 2010: Time of Use rates start becoming mandatory for all “Default Service” residential customers (≈ 25 M customers involved)

ToU Rates: Peak hours (8.00-19.00 working days)

Off-peak hours (remaining hours)

Motivation: make the tariff more cost reflective and progressive expose consumers to time variable costs of electricity supply

Transition period: up to December, 31st 2011 limited variation between peak and off-peak price

Regular period: from January, 1st 2012 larger variation between peak and off-peak price

Liberalisation of the electric system completed in 2007: - Production and Sale of electricity are “free”; - Transmission and Distribution services are regulated; - Customers can either choose their retailer on the energy market, or be

supplied by the local distribution company at a regulated rate (“Default Service”)

Tou rate (transition period)

0

5

10

15

20

25

30

35 1,500 kWh/yr

Peak

[c€/k

Wh

]

Energy Fixed Charge System Charge Taxes

2,500 kWh/yr 3,500 kWh/yr

Off-Peak Peak Off-Peak Peak Off-Peak

Δ= 7.2 %

Δ= 4.7 %

Δ= 3.4 %

Δ= 10.0 %

Main activities

Analysis of monthly consumption for a “Customer panel” composed of nearly 1,000 families:

• Statistically representatives of the whole Italian population; • Time series starts in July 2011.

Scope

To investigate if and how much a time variable electricity price can significantly affect consumers’ behaviour and change level and profile of consumption

Research project

Geographical distribution

Effect of the tariff change on the load curves (1/8)

Effect of the tariff change on the load curves (2/8)

Effect of the tariff change on the load curves (3/8)

Winter 2012 – Winter 2011

Spring 2012 – Spring 2011

Summer 2012 – Summer 2011

Δpeak hours

Δoff-peak hours

Δpeak hours

Δoff-peak hours

Δpeak hours

Δoff-peak hours

0,39% -0,39% 0,50% -0,50% -0,56% 0,56%

Average energy shift from peak to off-peak hours average working day

Effect of the tariff change on the load curves (4/8)

Effect of the tariff change on the load curves (5/8)

Effect of the tariff change on the load curves (6/8)

Effect of the tariff change on the load curves (7/8)

Effect of the tariff change on the load curves (8/8)

PEAK HOURS OFF-PEAK

HOURS

Transitional ToU tariff (2011) 30,95% 69,05%

Final ToU tariff (2012) 31,53% 68,47%

Δ 0,58% -0,58%

Effect of the tariff change on the consumption habits (1/3)

WASHING MACHINE

PEAK HOURS OFF-PEAK

HOURS

Transitional ToU tariff (2011) 18,94% 81,06%

Final ToU tariff (2012) 19,65% 80,35%

Δ 0,71% -0,71%

DISHWASHER

PEAK HOURS OFF-PEAK

HOURS

Transitional ToU tariff (2011) 32,22% 67,68%

Final ToU tariff (2012) 33,02% 66,98%

Δ 0,80% -0,80%

Effect of the tariff change on the consumption habits (2/3)

ELECTRIC OVEN

PEAK HOURS OFF-PEAK

HOURS

Transitional ToU tariff (2011) 28,47% 71,53%

Final ToU tariff (2012) 26,72% 73,28%

Δ -1,76% 1,76%

TUMBLE DRYER

PEAK HOURS OFF-PEAK

HOURS

Transitional ToU tariff (2011) 21,28% 78,72%

Final ToU tariff (2012) 22,60% 77,40%

Δ -1,32% 1,32%

Effect of the tariff change on the consumption habits (3/3)

WATER HEATER

PEAK HOURS OFF-PEAK

HOURS

Transitional ToU tariff (2011) 22,68% 77,32%

Final ToU tariff (2012) 22,56% 77,44%

Δ -0,12% 0,12%

AIR-CONDITIONER

Results of the simulation with the software tool SCUDO7 (1/3)

Results of the simulation with the software tool SCUDO7 (2/3)

Increase the probability of use during off-peak hours of the following appliances: - washing machine - dishwasher - iron - water heater - vacuum cleaner

Results of the simulation with the software tool SCUDO7 (3/3)

• Load curves are every similar before and after the tariff change, both in their shapes and in their average values.

• Consumers’ habits have not been affected by the tariff change, as the consumption shift from peak to off-peak hours has been low.

• The theoretical consumption shift which might be necessary to achieve a benefit larger than 1 €/year has resulted to be around 20%, which does not represent an unfeasible possibility for the average domestic user.

• But there are some factors which might prevent such shift to occur, such as the reduction of the price difference between peak and off-peak hours which is currently taking place in Italy.

• Some possible solution are changing the composition of the current groups of hours, the introduction of the “Critical peak pricing” or using other benefit different from the mere monetary ones.

Conclusions

simone.maggiore@rse-web.it