A report released on April 20 by Boulder, Colorado-based Navigant Research forecasts that the number of power customers on dynamic pricing rates globally is expected to rise from approximately 3.4 million in 2016 to 113.3 million in 2025.
Dynamic pricing – a concept in which the value of a product varies based on time or other factors – allows for rates that are indexed to real-time wholesale energy prices, instead of a flat rate across all hours and variables. This report, Dynamic Pricing,focuses on four major pricing types: real-time pricing (RTP), critical peak pricing (CPP), peak time rebates (PTR), and variable peak pricing (VPP).
“The concept of dynamic pricing for mass market electricity customers is fairly recent; aside from time-of-use rates, which offer set prices for set on- and off-peak periods that do not vary during the tariff period,” commented Navigant Principal Research Analyst Brett Feldman, adding, “However, with the proliferation of advanced meters that can record and communicate interval data, more dynamic types of pricing can be applied down to the residential level, encouraging growth in dynamic pricing programs.”
Growth in the number of customers using dynamic pricing for electricity is expected to be robust during the next decade, particularly in North America, according to the report. This trend is expected to hold true throughout the forecast, even as other regions eventually start to implement dynamic pricing programs.
