BeSmart

BeSmart: Smart-metering and dynamic elecricity tariffing: energy consumption choices, regulatory policies and welfare effects

Duration: November 2018 - October 2021

Project coordination: University of Kassel, Chair of Energy Economics

Collaborators: Other chairs of the University of Kassel (Empirical Economic Research and Foundations of Law, Private Law and Economics of Law), Potsdam Institute for Climate Impact Research (PIK)

Commissioned by: Federal Ministry of Education an Research (BMBF), second phase of the funding priority "Economics of Climate Change" ("Ökonomie des Klimawandels")

Summary: Dynamic electricity pricing and smart-grids are key elements of the vital transformation towards a decarbonized power production. Integrating volatile produced renewable electricity at large-scale will require electricity users, who adapt their consumption to the available electricity supply, particularly if energy sectors are coupled. Via price signals this consumption adjustment can be achieved. Economists have long been in favor of dynamic pricing, while it has rarely been implemented so far. Although recent technological progress has made it economically and technologically feasible, consumers’ acceptance remains a crucial barrier to a widespread implementation.

The objective of this project is to develop economic and legal solutions to raise the social acceptance of dynamic pricing schemes and thereby to unlock the potential of demand-side flexibility in wind and solar power dominated energy systems. Against this background, this project aims to provide practical advice to regulators, utilities and retail firms in addressing consumers’ acceptance of dynamic tariffs.

Structure: The interdisciplinary composition of the project team allows the integration of three basic research streams. First, by exploiting law and behavioral economic approaches, one of the core tasks within BeSmart is to develop a model of behaviorally biased electricity retail contract choices and its numerical application in scenario-based electricity market analyses.

Second, the microeconometric research within BeSmart provides the empirical underpinning of the behavioral tariff choice model.  The empirical part of the project hence seeks to test theoretical model hypotheses based on data from a representative household survey. Moreover, the stated choice experiments included in the survey will provide data on crucial decision-making parameters needed for the calibration of the numerical models. The survey will further allow the identification of important psychological determinants of households’ preferences for electricity contract designs, which could be risk preferences or environmental awareness. Furthermore, specific types of customers can potentially be identified for whom dynamic electricity tariffs are particularly appealing or not.

Third, besides assessing pecuniary instruments, BeSmart also investigates the relevance and effects of non-pecuniary measures on customers’ retail tariff choices such as the salience in customer protection laws, data security aspects and contract design. These “legal remedies”, the effectiveness of which will be elicited in the household survey, are thus an essential part of the theoretical and scenario-based analyses. Thereby, BeSmart ensures application-oriented research, which aims to design legal instruments to correct potentially flawed retail tariff choices. 

Project progress: On 17.01.2019 a first meeting of all project partners took place. Its central focus lay on the scope and coordination of interlinkages between the working packages.

 


Contact

Victor von Loessl

Tel. (0561) 804 - 7706

vonloessl@uni-kassel.de

 

Untere Königsstraße 71
34117 Kassel

Postal address:
Nora-Platiel-Straße 4
34109 Kassel

Prof. Dr. Heike Wetzel 

Tel. (0561) 804 - 7750
heike.wetzel@uni-kassel.de

 

Untere Königsstraße 71
34117 Kassel

Postal address:
Nora-Platiel-Straße 4
34109 Kassel