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Review of dynamic pricing programs in the U.S. and Europe: Status quo and policy recommendations

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Listed:
  • Hu, Zheng
  • Kim, Jin-ho
  • Wang, Jianhui
  • Byrne, John

Abstract

With the development of demand response (DR) technologies and increasing electricity demand, dynamic pricing has been a popular topic in many countries. This paper evaluates various dynamic pricing programs in the U.S. and Europe, and provides insights into various aspects including risks and rewards, enabling technologies, lower-income groups and customer types surrounding programs such as Time-of-Use (TOU), Critical Peak Pricing (CPP), Peak Time Rebates (PTR) and Real Time Pricing (RTP). We conclude this paper with three main findings: (1) policy coordination in promoting dynamic pricing programs between federal and state regulatory agencies is very critical; (2) customer engagement is very important and can be enhanced via more accessible educational programs and policy adjustments; and (3) more investment in related R&D is required to construct a commonly accepted methodology for measuring the effectiveness of dynamic pricing programs.

Suggested Citation

  • Hu, Zheng & Kim, Jin-ho & Wang, Jianhui & Byrne, John, 2015. "Review of dynamic pricing programs in the U.S. and Europe: Status quo and policy recommendations," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 743-751.
    • Handle: RePEc:eee:rensus:v:42:y:2015:i:c:p:743-751
    DOI: 10.1016/j.rser.2014.10.078
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    References listed on IDEAS

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