BEUC: Dynamic electricity pricing is the missing piece in the clean heating transition

Dynamic electricity pricing can offer consumers some substantial savings on their energy bills, but its full potential is still yet to take off. These are the findings of a new BEUC study on dynamic pricing.

Meeting Europe’s climate objectives will mean decarbonising the way we heat our homes and move around in terms of transport: shifting from fossil fuels to sustainably produced electricity. But this transition will create some challenges, notably if everybody tries to heat their home and charge their electric cars at the same time, potentially overwhelming the electricity grid.

This will also entail being more flexible in how we use energy, shifting our consumption to off-peak hours to lower pressure on the grid. But it has been more than five years since the EU’s Clean Energy for All Europeans Package made dynamic pricing contracts a possibility and there are still too few offers available on the market.

BEUC commissioned a new study from LCP Delta to look at both the potential advantages and disadvantages of dynamic pricing contracts as well as a series of recommendations for policymakers to help unleash its full potential. The main findings include:

1. Homes with a heat pump benefit greatly from dynamic pricing contracts. Those in Belgium, Spain and Italy who have a heat pump and switch to dynamic price tariffs can save between €460-€1,350 per year.
2. Even when sticking to ‘static’ pricing, running a heat pump leads to lower energy bills. In Belgium, Italy and Spain, consumers can save between €170-€720 per year if they switch from a gas boiler to a heat pump.
3. Consumers do not necessarily need to be equipped with sophisticated technologiessuch as smart and automated controls, or batteries to benefit from dynamic tariffs.
4. The financial risks of using regular appliances during peak hours are limited, as are the risks of unpredictable pricing.
5. The benefits of dynamic prices can vary significantly between countries. This is mostly attributable to differences in national taxation levels of electricity.

The study concludes with a series of recommendations for policymakers. Notably, EU countries should finally make dynamic price offers available to all consumers, public authorities should adjust their tax systems to favour dynamic price offers, and consumers should receive trustworthy information about its benefits.

Read more:

• Full study
• Executive summary