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Consumer demand for time of use electricity tariffs: A systematized review of the empirical evidence

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  • Nicolson, Moira L.
  • Fell, Michael J.
  • Huebner, Gesche M.

Abstract

Time of use (TOU) tariffs, if widely adopted, could help make electricity more secure, clean and affordable. However, quite little is known about whether consumers will switch to a TOU tariff or what might increase uptake if switching rates are lower than required. This paper presents the results of a systematized review and meta-analysis combining the results of 66 measures of uptake to a variety of TOU tariffs across 27 studies conducted in six countries. It provides the first robust estimate of consumer demand and correlates of demand for TOU tariffs that is not based on the results from just a single study or tariff. Four main conclusions emerge. First, if consumers are left to opt-in to TOU tariffs, uptake could be as low as 1% unless efforts are made to close the intention-action gap, otherwise enrolment could reach 43%. Second, if enrolment is opt-out, uptake could approach 100%. Third, whilst national surveys indicate the potential appetite for TOU tariffs in a population, they are insufficient for predicting future TOU tariff adoption rates; the median proportion of domestic energy bill payers who say they would be willing to switch to a TOU tariff in national surveys is five times higher than the median enrolment rate to TOU tariffs offered by utilities. Fourth, real-time pricing tariffs, in which the price of electricity varies freely throughout the day, are less popular than static TOU tariffs which have fixed peak and off-peak rates. This paper discusses the limitations of opt-out enrolment for TOU tariffs and presents results suggesting that small upfront payments, bill protection and automation are promising alternative methods of increasing opt-in enrolment. Policymakers and researchers should now consider how recruitment will be performed, weighing up the benefits to society as a whole against the distributional impacts for individuals and groups.

Suggested Citation

  • Nicolson, Moira L. & Fell, Michael J. & Huebner, Gesche M., 2018. "Consumer demand for time of use electricity tariffs: A systematized review of the empirical evidence," Renewable and Sustainable Energy Reviews, Elsevier, vol. 97(C), pages 276-289.
    • Handle: RePEc:eee:rensus:v:97:y:2018:i:c:p:276-289
    DOI: 10.1016/j.rser.2018.08.040
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    References listed on IDEAS

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