Did Griddy Just Write an Obituary to Dynamic Pricing?
- Mar 3, 2021 6:47 pm GMT
In the wake of the power crisis in Texas, some people are saying that dynamic pricing is dead. Well, let me draw inspiration from W C Fields who famously said, "The news of my death is greatly exaggerated." What may have died is the idea that residential customers should be exposed to totally unhedged hourly pricing that flows from the wholesale market. Why do that? First of all, hourly real time pricing (RTP) is one end of the spectrum. Other variants are discussed below. Second, RTP can be offered with price caps, floors and collars. Thirdly, RTP can be limited in its application to deviations from a historical reference load shape. It's important to note that dynamic pricing comes in many other flavors: variable peak pricing, critical peak pricing and peak-time rebates. There is a wealth of evidence from hundreds of pilots that dynamic pricing works. That claim is beyond dispute. Dynamic pricing will become a necessity as the grid is powered primarily by renewable energy. Load flexibility will be the need of the hour. There is no better way of creating load flexibility then to offer dynamic pricing to customers.
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