Towards variable end-consumer electricity tariffs reflecting marginal costs: A benchmark tariff

Abstract

A time-varying, hourly-based electricity tariff scheme for end-consumers is proposed that reflects truthfully marginal costs of electricity provision, based on spot market prices, and electricity transmission, based on actual T&D grid load levels. This tariff scheme is proposed as a benchmark for studying demand response (DR) of end-consumer. The tariff concept is applied to the situation in the city of Zurich, Switzerland, using time-series of the Swiss EEX power market spot prices and Zurich's yearly electricity load profile. A price spread analysis and a benchmark for measuring the economic incentive of variable electricity tariffs on the end-consumer side are presented.