Dynamic Pricing

Real-Time Pricing, Critical Peak Pricing, Peak Time Rebates,
and Variable Peak Pricing: Global Market Analysis and Forecasts

Dynamic pricing for products exists in many aspects of society, including airline tickets, theater and sporting event tickets, subway fares, and road tolls. The basic concept is that the value of a product varies based on time and other factors. Thus, being able to charge prices that better reflect that value is more economically efficient than simply charging an average flat price across all hours and variables.

In the electricity industry, the concept of dynamic pricing for mass-market customers is fairly recent, aside from time-of-use rates that offer set prices for fixed on- and off-peak periods. Rates that are indexed to real-time wholesale energy prices have been around for large commercial and industrial (C&I) customers since deregulation. With the proliferation of advanced meters that can record usage at small intervals, more dynamic types of pricing can be applied down to the residential level. The largest region of adoption is expected to be North America, a trend that will likely hold true throughout the forecast—even though other regions will eventually start to implement dynamic pricing programs. According to Navigant Research, the number of customers on dynamic pricing rates globally is expected to rise from approximately 3.4 million customers in 2016 to 113.3 million in 2025.

This Navigant Research report examines the market drivers and barriers for the global dynamic pricing market. The report focuses on four major pricing types: real-time pricing (RTP), critical peak pricing (CPP), peak time rebates (PTR), and variable peak pricing (VPP). Global market forecasts for number of customers, broken out by pricing type, sector (residential and C&I), and region, extend through 2025. The report also examines case studies of dynamic pricing from around the world, summarizing their objectives and impacts, as well as the lessons learned.

Key Questions Addressed:
  • What is dynamic pricing?
  • What technologies are involved in dynamic pricing?
  • What are the key drivers and barriers to the implementation of dynamic pricing?
  • How many customers are enrolled in dynamic pricing programs worldwide?
  • Which regions will see the most growth in customers for dynamic pricing programs?
  • Who are some of the utilities implementing dynamic pricing programs?
Who needs this report?
  • Dynamic pricing vendors
  • Utilities
  • Energy management hardware and software providers
  • Thermostat vendors
  • Regulators
  • Investor community

Table of Contents

1. Executive Summary

1.1  Introduction to Dynamic Pricing

1.2  Market Drivers

1.3  Market Barriers

1.4  Market Forecast

2. Market Issues

2.1  History and Evolutionary Path of Dynamic Pricing

2.2  Definition of Dynamic Pricing

2.2.1   Time-of-Use (TOU) Pricing

2.2.2   Real-Time Pricing (RTP)

2.2.3   Variable Peak Pricing (VPP)

2.2.4   Critical Peak Pricing (CPP)

2.2.5   Critical Peak Rebates (CPR)/Peak Time Rebates (PTR)

2.3  Mass Market versus C&I Dynamic Pricing

2.4  Drivers for Dynamic Pricing

2.4.1   Advanced Metering Infrastructure

2.4.2   Enabling Technology

2.4.3   Distributed Energy Resources

2.4.3.1  Energy Storage

2.4.3.2  EVs

2.4.4   Opt-In versus Opt-Out Rate Structures

2.4.5   Cost

2.4.6   Grid Modernization

2.4.7   Competitive Retailer Energy Suppliers

2.5  Barriers for Dynamic Pricing

2.5.1   Utility Resistance to Change

2.5.2   Lack of AMI Integration

2.5.3   Lack of Customer Education and Demand

2.5.3.1  Bill Protection

2.6  Case Studies

2.6.1   United States

2.6.1.1  BGE

2.6.1.1.1  Smart Energy Rewards Program

2.6.1.1.2  Objective of the Program

2.6.1.1.3  Budget of the Program

2.6.1.1.4  Impact of the Program

2.6.1.1.5  Lessons Learned

2.6.1.2  OG&E

2.6.1.2.1  SmartHours Program

2.6.1.2.2  Objective of the Program

2.6.1.2.3  Budget of the Program

2.6.1.2.4  Impact of the Program

2.6.1.2.5  Lessons Learned

2.6.1.3  SMUD

2.6.1.3.1  Smart Pricing Options Program

2.6.1.3.2  Objective of the Program

2.6.1.3.3  Budget of the Program

2.6.1.3.4  Impact of the Program

2.6.1.3.5  Lessons Learned

2.6.2   International

2.6.2.1  Canada

2.6.2.2  Europe

2.6.2.2.1  Italy

2.6.2.2.2  France

2.6.2.3  Asia Pacific

2.6.2.3.1  Australia

2.6.2.3.2  Japan

2.6.2.3.3  China

3. Market Forecasts

3.1  Forecast Introduction

3.2  Assumptions Guiding this Forecast

3.3  Global Dynamic Pricing Adoption

3.4  Dynamic Pricing Adoption in the United States

3.5  Conclusions and Recommendations

4. Acronym and Abbreviation List
5. Table of Contents
6. Table of Charts and Figures
7. Scope of Study, Sources and Methodology, Notes

List of Charts and Figures

  • Dynamic Pricing Customers by Region, World Markets: 2016-2025
  • Share of Dynamic Pricing Customers by Region, World Markets: 2016
  • Share of Dynamic Pricing Customers by Region, World Markets: 2025
  • CAGRs of Dynamic Pricing Customers by Region, World Markets: 2016-2025
  • Residential Dynamic Pricing Customers by Region, World Markets: 2016-2025
  • C&I Dynamic Pricing Customers by Region, World Markets: 2016-2025
  • Dynamic Pricing Customers by Pricing Type, United States: 2016-2025
  • Residential Dynamic Pricing Customers by Pricing Type, United States: 2016-2025
  • C&I Dynamic Pricing Customers by Pricing Type, United States: 2016-2025
  • Share of Dynamic Pricing Customers by Pricing Type, United States: 2016
  • Share of Dynamic Pricing Customers by Pricing Type, United States: 2025
  • CAGRs of Dynamic Pricing Customers by Pricing Type, United States: 2016-2025
  • Dynamic Pricing Customers by Sector, United States: 2016-2025
  • Risk/Reward Profile of Dynamic Pricing Options
  • AMI Communication Chain
  • Load Impacts of SPO Program
  • Ontario’s TOU Prices
  • Ontario’s Summer and Winter TOU Prices
  • Italy’s Past Load Curves Compared to 2011 TOU Load Curve
  • France’s Current Tempo Tariff Rates
  • Ausgrid Peak, Shoulder, Off-Peak Periods
  • Energy Australia Peak, Shoulder, Off-Peak Periods
  • TEPCO TOU Pricing

List of Tables

  • Dynamic Pricing Customers by Pricing Type, United States: 2016-2025
  • Residential Dynamic Pricing Customers by Pricing Type, United States: 2016-2025
  • C&I Dynamic Pricing Customers by Pricing Type, United States: 2016-2025
  • Share of Dynamic Pricing Customers by Pricing Type, United States: 2016 and 2025
  • Growth of Dynamic Pricing Customers, Year-over-Year, United States: 2016-2025
  • CAGRs of Dynamic Pricing Customers by Pricing Type, United States: 2016-2025
  • Dynamic Pricing Customers by Region, World Markets: 2016-2025
  • Residential Dynamic Pricing Customers by Region, World Markets: 2016-2025
  • C&I Dynamic Pricing Customers by Region, World Markets: 2016-2025
  • Share of Dynamic Pricing Customers by Region, World Markets: 2016 and 2025
  • Growth of Dynamic Pricing Customers, Year-over-Year, World Markets: 2016-2025
  • CAGRs of Dynamic Pricing Customers by Region, World Markets: 2016-2025 

Report Details

  • Pages: 49
  • Tables, Charts,
    Figures:
    35
  • Release Date: 1Q 2016
  • Release File(s): PDF* and Excel *Indicates primary report file.

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