The effects of household automation and dynamic electricity pricing on consumers and suppliers

Empowering the end-users to change their passive behaviour and to provide flexibility is one of the key elements of Directive 2019/944 from the EU Clean Energy of all Europeans legislative package. This change does not come only from the technological advancements but needs to be driven by dynamic electricity pricing for retail consumers, reflecting the needs of the system. These incentives for consumers to change their consumption patterns should be beneficial for multiple power system entities, from system operators to suppliers and RES owners. The goal of this paper is to investigate the benefits for different types of households of increased automation, selecting different electricity pricing options, and exploiting the opportunities of participating in an explicit demand response program. Also worth investigating is the impact this will have on the suppliers, from changing approach to operating their portfolio to financial aspects and market positions. To address these problems, we created a mixed-integer linear programming model of a household including common appliances, as well as behind-the-meter electricity generation, energy storage and electric vehicle charger. The results show that automated households have lower electricity bills already by adopting time-of-use (TOU) pricing, but the savings increase with real time pricing (RTP). On the other hand, the suppliers' revenue is mostly impacted by the households' local production and its profit is impacted by both electricity injections and imbalance settlements faced due to households' unscheduled deviations. The results indicate that the suppliers with large shares of passive consumers have no incentive to offer dynamic tariffs as their revenue changes very little until high shares of flexible technologies are reached. PV emerges as the technology with the highest impact which can be observed already when its share surpasses 50% of installations on previously passive households. Interestingly, when an aggregator takes on the role of dynamic price provider to exploit the opportunities in different markets, in our case the mFRR, the supplier will see a decrease in profit in most cases. The exception here are the subcases when PV and EV are a dominant retail customer flexible technology.(c) 2022 Elsevier Ltd. All rights reserved.

Automated summary

Empowering end-users to change their behavior and providing flexibility is an important aspect of the EU Clean Energy legislative package. This paper investigates the benefits of automation and different electricity pricing options for households, as well as the impact on suppliers. The results show that automated households can reduce electricity bills through time-of-use pricing, and suppliers' revenue is mostly affected by households' local production.