Smart Energy: Tariff design for residential settings

Smart Energy: Tariff design for residential settings

Renewable energy is expanding quickly in many regions of the world. Some of this expansion is happening at a local level, where households install small solar generation units. For such residential settings, electricity is often treated as a public good and households pay for their electricity use via tariff subscriptions. However, these tariffs are sometimes designed with assumptions that no longer hold, for example assuming households are passive energy consumers. Hence, these conventional tariffs can be ineffective in accurately matching costs to revenue and create unfairness within the subscribed population. More importantly, they can cause significant economic inefficiency. We study these unfairness and economic efficiency aspects of conventional tariffs and various proposed alternatives. Our study's insights can help clarify the outcomes of policy choices in the retail electricity sector for various stakeholders, including policymakers, retailers, and energy users.

For this analysis, we use high-resolution electricity data from the Pecan Street Dataport consisting of consumption and generation patterns. These datasets consists of per-minute data for hundreds of households in the Austin, TX, USA, area for the entire year of 2016. This is matched with real-time market price data from the Electricity Reliability Council of Texas. These values are used as a basis for calibrating and comparing the quantities of various indicators of unfairness and economic efficiency in the household population.