Keep it simple: time-of-use tariffs in high-wind scenarios

Price signals have been suggested to bring about greater demand side flexibility and thus support the integration of variable sources of energy, such as wind. A conflict exists between keeping these signals simple for consumers, while making responses appropriate for increasingly complex supply–demand balancing dynamics in future. This study reviews some of the demand responses observed in time-of-use (ToU) tariff trials and assesses their effectiveness in scenarios with higher levels of wind. The authors simulate wholesale real-time prices for high-wind scenarios as a benchmark tariff. Simple tariff structures are compared against real-time prices for the extent to which they can ‘nudge’ demand in the ‘right direction’. They present results which suggest that even in high-wind scenarios, simple ToU tariffs could have a beneficial effect on overall system costs. The load shifting and reduction behaviour observed under ToU trials could lower energy costs by between 4 and 6% without the need for complex price signals.