No one needs to be convinced that we have entered a time of expensive electricity. Climate policy and the move away from fossil fuels will keep electricity prices high. The share of renewable, weather-dependent energy sources is also increasing, making networks more unstable and resulting in their periodic shutdowns. Dynamic tariffs are a step towards reducing absurdly high energy prices and increasing the flexibility of the grid. Flexibility is becoming an increasingly important factor in stabilising the electricity system.
Dynamic tariffs are a solution that allows energy to be billed according to current energy market rates. These rates are set hourly on the Polish Power Exchange and customer usage is measured through the use of smart meters.
This is a significant change compared to today's system, which is based on fixed, long-term contracts with unchanging energy purchase prices. Price fluctuations can only occur to a limited extent depending on the number of tariffs offered by the distributor.
Hourly fixed rates mean that if the prices on the exchange are lower at any given time, customers with a dynamic tariff will pay less for the electricity purchased at that time. When rates are higher, they will pay more. By keeping track of current prices and adjusting their consumption accordingly, consumers will be able to actively influence their energy bills, not only by reducing their consumption, but by planning their consumption throughout the day.
This model already works well in many countries. The Scandinavians, Germans and Portuguese use it. Wherever it has been introduced, consumers are learning new habits that allow them to save on their bills and actively contribute to balancing the national electricity system. We can assume that in time it will be the same for us.
The introduction of a system based on dynamic tariffs will not take place simultaneously for all consumers. A prerequisite for using this system is the possession of smart meters that allow remote reading. Currently, only prosumers have access to smart meters but they with be rolled out to all consumers by July 4, 2031. In addition, for the entire dynamic tariff system to function properly, the Central Energy Market Information System (CSIRE) must be implemented - its launch is scheduled for July 2024.
In simplest terms, CSIRE will record and make available metering data from consumers' meters which, in addition to the introduction of dynamic tariffs, will enable a quicker (assumed to be up to 24 hours) change of electricity supplier.
The introduction of the dynamic tariff system will neither significantly reduce energy prices nor balance the electricity system overnight on its own. For this, it is necessary to educate consumers on how to change their energy use to one that provides both savings and increases system stability.
The answer, as usual, is: it depends. And it depends on how we use energy. If the majority of energy-intensive processes are carried out at times when energy demand, and therefore energy prices, are at their highest, there is nothing to be hoped for in terms of savings. Our bills may even increase. But if we have the option of shifting these processes to a time when the price is low, our wallets will experience a significantly smaller cash outflow.
The attractiveness of the mechanism described is only apparent when we look at how electricity prices compare with classic solutions. Assuming an annual consumption of 50 MWh, one has to pay on average:
As can be seen, the potential savings with dynamic tariffs can amount to almost PLN 8,000 compared to prices under a comprehensive contract with an electricity supplier for the same energy consumption.
Such large savings are possible, of course, if we follow the price changes and plan our energy consumption so our highest consumption is during the hours when the price is the lowest.
I mentioned earlier that the quiet winner of the energy law amendment will be the owners of photovoltaic installations[MH1] .
These prosumers are already prepared to switch to dynamic tariffs, by virtue of already having smart meters. They also, to a certain extent, have the ability to control the amount and timing of energy injected into the grid. This may be with the help of self-consumption or, more likely, energy storage. Indeed, it seems that these new regulations will be a significant stimulus for the rapid development of their market, which is still in its infancy in our country.
Countries where a dynamic pricing system is already in place demonstrate just how beneficial this system has the potential to be. The increase in the importance of RES in the energy mix means that mid-day sale prices will fall sharply.
In the state of South Australia, AU, for example, exchange prices range from -$0.06/kWh in the sunshine hours to +$0.3/kWh in the evening. Over the course of a single day! Note that there are negative prices on the exchange, during which photovoltaic installations are disconnected from the grid so as not to cause losses!
In such a situation, energy storage will be a particularly cost-effective solution. The example of the April[MH2] 2024 disconnections shows that negative energy prices may not be imminent this year, but they are on their way. With storage, the prosumer sends less energy to the grid, thus reducing the risk of over-voltage on the grid and plant shutdowns. Net-billers can buy electricity from the grid less frequently, making photovoltaics more profitable for them. For business prosumers who are able to store energy during peak production periods and do not need to buy energy in the evenings, dynamic tariffs offer an additional profit opportunity by selling stored surpluses at the highest prices.
The amount of profit to be made from switching to dynamic tariffs depends on how much attention consumers pay to following the current price situation and adjusting their energy consumption to the demands of the moment. Of course, I am not urging anyone to abandon current activities and focus on watching the exchange. It is much more beneficial to cede this unpleasant duty to artificial intelligence.
Modern, intelligent energy systems are capable of not only scheduling the operation of specific appliances or entire systems in real time, but of collecting data from meters, comparing it with the current stock market situation and even controlling the energy stored in energy storage. All this can help increase energy savings. Those consumers who invest in such systems in time, whether in the home (smart home) or in a business situation, will become the real beneficiaries of a new dynamic tariff billing.