it is interesting to know, for many enterprises, that they can have access to dynamic pricing of their electrical energy on several electricity markets, through specialised intermediate organisations. Instead of paying all the energy according to the usual 2 or 3 different price levels (like day and night tariff), fixed in time blocks for each 24 hours, they can have a dynamic price per kWh for each hour or even 15 minutes. This tariff will adapt to the real supply and demand situation on the market. That means: deep discounts during certain hours but also very expensive kWh’s during other hours. The mechanism is well explained at the website of an enterprise, which I used as an example during my lessons at an evening school in Switzerland. This explanation is in an old blog article of the cofounder, still valid because of its clear introduction: visit www.next-kraftwerke.com/opx-energy-blog

​

I have (yet) no interests with this company but would like to cooperate with them, to be able to help my clients. That is because it is expanding in several countries in Europe, offering different options, not only for the consumers but also for producers of energy and owners of energy storage. You should explore these kind of market actors in your region. Where there is value, also market players will soon pop up.

​

It will be clear to you that the extremes in the dynamic tariffs can work against you, as much as it can help you. If your enterprise has flexibility to determine how much they consume in which hour, then it can have a good discount on the energy bill and will help the society to manage the volatility of supply and demand.

​

It will be very useful to have a cost-simulator, where the input is the consumption curve and the dynamic tariff. The outcome will be a cost at the end of the week, as this is the time unit that is repeated over and over again. More advanced simulators (and they can be spreadsheets) calculate also the cost for a whole year. I will attach in some future article such a spreadsheet. You understand, that if a week has a certain pattern on the short term, a year has an additional cycle on long term. Usually, these tariffs, even if influenced by a volatile market, will follow a known pattern, so that it is possible to predict with a certain precision the best time to increase or decrease your consumption. 

So, you will object: how will we be able to influence our consumption curve, if it is a function of, and thus commanded by the production or activity? 

The answer is: you can do this with an energy storage. We know however, that these are rather expensive. Battery storage costs about 200 USD per kWh of capacity, so with 4000 cycles in a lifetime, that is a cost of 0.05 USD per kWh of energy on top of its purchase. So that is the discount you want on the energy before break even is possible. Therefore you need the dynamic tariffs, because they go way beyond the difference of this order of magniture (0.05$), which is usually the difference between day and night tariffs of today’s price structure. Another possibility was described in the previous newsletter, about the ice storage (see the article about Demand Side Management (DSM)). If much of your consumption goes into a chiller, you can store the cold instead of the electricity. The price to store 1 kWh of transformed electricity will be much lower. You can now run the chiller at full power at tariffs that might be a fraction of the night tariff that you pay today. Also this can be simulated, I gave you in the last number a spreadsheet with costs of storage and tariffs for electricity.

​

As I will always mention the collateral benefits of technologies and approaches, here is what they are for the dynamic pricing, especially when used together with one or the other form of energy storage:

• More peak power is available than before, because you may sum the capacity (in kW) of the electricity supplier to the capacity of your storage.

• The electricity supplier will register “softer” peaks, so you will pay less demand charges, which are a component of the electricity bill that is less known. You pay it on the highest peak in the month, even if it occurred only 1 quarter hour in the whole month, so it is convenient to soften those peaks!

• You can run your business in case of a black out, at least if the storage is large enough. If not, you can at least continue to run essential loads.

• You are a very useful and modern market player, absorbing power that will otherwise find no buyer and avoid consuming when everyone else needs it badly. This function is really important in each kind of market. Why should you not be proud of it and communicate that openly?

​​

In a following newsletter I will provide you with a spreadsheet with a simulator for dynamic pricing, so be sure not to miss one of them. I am always keen to give you concrete value for you enterprise. And for the Energy Transition.