Munich, 3 September 2024 – gridX, leading smart energy company in Europe, has released a comprehensive new 27-page report highlighting the critical role of time of use (ToU) tariffs in addressing the growing volatility in electricity prices across Europe. As the continent faces unprecedented fluctuations in energy costs, gridX’s report underscores the importance of integrating demand-side flexibility to stabilize the grid and reduce costs for end consumers.
Price volatility on the rise across Europe
The report, covering key European markets such as the United Kingdom, the Netherlands, Spain, Denmark and Sweden, reveals significant increases in electricity price deviations. In 2023, the mean daily standard deviation in day-ahead electricity prices across Europe tripled compared to 2020. The number of instances where prices exceeded 100€/megawatt hour (MWh) in 2023 saw a remarkable 67 percent increase over 2021 levels across Europe, signaling a volatile market environment. In individual markets from 2019 to 2023 these numbers grew more sharply: 692-fold in Denmark from 5 to 3,461, in Spain from 0 to 3,634 and in the Netherlands 609-fold from 7 to 4,265. Moreover, the report identifies a substantial rise in negative day-ahead electricity prices, with the average number of negative hours growing twelve-fold from 2022 to 2023. Sweden led the way with 434 negative hours, reflecting huge potential in leveraging flexibility in an increasingly decentralized and intermittent energy system. The average daily price spread – the difference between the daily minimum and maximum averaged over the year – also tripled or quadrupled in most countries from 2019 to 2023, e.g. from €30 to 98€/MWh in Germany, €67 to 224€/MWh in Sweden, or €70 to 319€/MWh in the Netherlands.
Impact of renewable energy and the need for flexibility
The report attributes these price fluctuations largely to the surge in renewable energy generation, particularly solar power. In countries like the Netherlands and Spain, high solar irradiance during midday hours has often been the main driver of negative energy prices. According to gridX, this trend highlights the urgent need for integrating flexible demand-side solutions, such as ToU tariffs, to optimize energy consumption and balance supply and demand more effectively. ToU tariffs offer consumers a powerful financial incentive to shift their energy consumption to lower price periods, which often coincides with lower demand or higher renewable energy production. This approach not only alleviates grid congestion and reduces overall system costs but also translates into significant savings for end users. For instance, gridX's simulations show that in the Netherlands, households with an 4 kilowatt peak (kWp) photovoltaic (PV) system, a 6.4 kilowatt hour (kWh) battery, and an annual consumption of 3,500 kWh can save €226 per year through ToU optimization, compared to a setup with no energy management system (EMS). In Spain, households equipped with an 5.4 kWp PV system, a 4 kWh battery, and an annual consumption of 5,500 kWh can achieve annual savings of €147. Similarly, in Sweden, households with an 8 kWp PV system, a 9.6 kWh battery, and an annual consumption of 5,700 kWh can save €237 annually by adopting ToU tariffs.
Overcoming challenges and maximizing benefits
While ToU tariffs present substantial benefits to households, the report acknowledges certain challenges in consumer adoption, particularly concerns about potential behavior changes and disruptions to daily routines. However, gridX’s report emphasizes that with automated processes, partnerships within the energy ecosystem and user-friendly solutions, consumers can experience greater convenience without sacrificing comfort. gridX's hybrid approach to smart energy management – comprising a local gateway and a cloud plattform – offers up to several hours of offline functionality, direct asset communication, and holistic optimization of all connected energy resources, thereby ensuring a seamless and reliable experience for end users. By combining the value from ToU tariffs with other use cases, gridX enables consumers and businesses to access new revenue streams while simultaneously contributing to a more stable and sustainable energy system. As Christian Augustin, Team Lead Product Management at gridX, puts it, “gridX has the technical foundation ready. Now it’s about scaling time of use tariffs in the market together with our partners, capturing the value that’s already available and which consumers are ready for, and then building on this in the future with more advanced use cases.”
Find the executive summary or download the report for free on the dedicated ToU report landing page.
((Photo: © gridX GmbH, Reprint free of charge; Image caption))
Leveraging volatility: gridX's latest report on time of use tariffs identifies how increasing fluctuations in electricity prices can be turned into a positive for households across Europe.
gridX is Europe's leading smart energy company based in Aachen and Munich. With its IoT platform XENON, gridX enables manufacturer-independent monitoring and management of distributed energy resources. XENON allows partners to develop and scale energy management solutions faster than ever before. By partnering with gridX, Fastned is able to install more charging points at sites without the need for costly grid extensions, and the Viessmann Group is able to offer its customers intelligent and integrated home energy management systems.
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