What is energy dynamic pricing?
Dynamic pricing is a pricing strategy that charges customers different prices for energy based on the time of day. With this type of contract, you will be charged for your energy consumption based on the hourly-varying energy prices of the day-ahead market (luckly they're available a day in advance.) This pricing strategy is designed to encourage consumers to use less electricity during times when demand is high and prices are at their peak.
How can it help you save money on your energy bill?
These dynamic energy contracts provide interesting business opportunities. As one can charge our ModuleOne energy storage system when energy prices are low and discharge when energy prices are high.
The day-ahead market is of particular interest since prices are known one day in advance, This means it is not necessary to rely on market forecasts for optimal scheduling of battery charging and discharging.
What are the potential drawbacks of this pricing strategy?
Dynamic pricing's potential drawback is the unkown nature of future prices, which are generated daily. This makes the system volatile but also provides opportunity.
Dynamic pricing can also be difficult to implement and manage, as it requires close monitoring of market conditions. There is also the potential for abuse, as businesses could use dynamic pricing to exploit consumers during times of high demand.
Is energy dynamic pricing right for you?
Most consumers nowadays have a variable or fixed tariff contract, and not a dynamic one. But we can already simulate the profit a MyGrid consumer would make when he/she would switch from their current contract to a dynamic one in combination with the ModuleOne.
Our calculations are based on a typical Flemish household with two working parents and two school-aged children. Their total consumption is 3781 kWh, which is consistent with VREG estimates of average Flemish energy consumption. We also asssume that the ModuleOne performs one charging and discharging cycle each day.
For 2021, we calculated that switching to a dynamic contract in conjunction with the ModuleOne could potentially save €136.83 per year, of which €45 is related to the ModuleOne's flexibility and €91.3 is related to the dynamic pricing scheme.
Because 2022 is not yet complete, and thus not all day-ahead prices have been realised and published, a similar analysis to that of 2021 for an average Flemish household is not yet possible. We plan to update this in early 2023, but the profit has already more than doubled as of today.