Session 12

Question 1

What’s the “own” cost fo retail suppliers?

Answer 1

Metering, invoicing, customer contact, advertisement.

Question 2

What does the retail price comprise? (3)

Answer 2

1. Wholesale price
2. Retailing costs and metering
3. Taxes, levies, grid fees

Question 3

Why retail rate structre is a matter of public policy (3)

Answer 3

1. Prices of goods are regularly determined by market parties (freedom of contract)
2. There are many administrative cost components that are added to retail prices (taxes, grid fees, levies)
3. In many otherwise liberalized electricity markets, retail prices remain regulated

Question 4

How should retail rates be structured? (4 questions)

Answer 4

1. Should prices be identical for all consumers?
2. What is the “product” that should be priced?
3. Should prices differ over time?
4. How can consumers be protected against price risk?

Question 4

Types of dynamic pricing (3)

Answer 4

1. Time-of-Use pricing (pre-announced)
2. Critical peak pricing (only at times of scarcity)
3. Real-time pricing

Question 4

How are retail tariffs usually designed/ what do they comprise? (4)

Answer 4

1. Fixed component (€/month)
2. Energy component (€/kWh)
3. Power component (€/kW)
4. Peak demand component (€/kW)

Question 4

How could dynamic pricing be used for private households?

Answer 4

Conventional consumption (cooking, lighting, washing) can’t really be shifted.
“New” consumption is more flexible (EV, heat pumps)

Differentiating pricing between these groups could make sense.

Question 5

What’s a prosumer, what’s prosumage?

Answer 5

Producer + consumer = prosumer
producer + consumer + storage = prosumage

both/ all three on one side.

Question 6

What is grid parity?

Answer 6

When generation costs (LCOE) of small-scale solar PV fall below the retail rate. Then it pays off for a household to replace electricity bought from the retailer by self-produced electricity

Question 7

Problems with self-consumption of rooftop solar PV (3)

Answer 7

1. Tax erosion (avoided taxes/ grid fees will be collected by rising the fees on the “remaining” consumed electricity of other consumers)

2. Distorted investment incentives (small entities make less sense than industrial-scaled ones)

3. Distortive dispatch incentives

Question 8

Grid- vs. self-consumption: How to solve the problem (2)

Answer 8

1. Redesign retail tariffs (e.g. capacity-based grid fees)
2. Tax all electricity consumed

Question 9

What arguments are to be considered when structuring retail tariffs? (10)

CRUCIAL!

Answer 9

1. “Polluter / causer pays” (those using the el. should pay for all costs associated with it)
2. Incentives for energy efficiency and energy conservation (higher retail tariffs imply stronger incentives for conserving electricity and energy efficiency)
3. Efficient price signals for decarbonization across fuels (All fuels should be taxed according to GHG intensity)
4. Electrification of heating and transport
5. Providing flexibility
6. Optimal tax theory (Grid charges should reflect underlying cost structure of the network in order to not be distortive)
7. Distributive impact (low-income households tend to consume less electricity, hence are hit disproportionally by fixed charges)
8. Self-consumption and prosumage
9. Shielding from politics
10. Transparent and easy to understand