The voluntary price for the small consumer: Real-time pricing in Spain

• Published in: Energy policy Vol. 102; pp. 41 - 51
• Main Authors: Roldán Fernández, Juan Manuel, Payán, Manuel Burgos, Santos, Jesús Manuel Riquelme, García, Ángel Luis Trigo
• Format: Journal Article
• Language: English
• Published: Kidlington Elsevier Ltd 01-03-2017; Elsevier Science Ltd
• Subjects: Consumers; Consumption; Demand response; Electric industries; Electric rates; Electricity; Electricity consumption; Electricity pricing; Energy conservation; Energy demand; Energy policy; Energy saving; EU directives; Load-shifting; Markets; Prices; Qualitative analysis; Qualitative research; Real time; Real-time pricing; Reduction; Reforms; Regulation; Residential energy; Savings; Spain; Studies; Tariffs; Time of day pricing; Time of use electricity pricing; Voluntary price for the small consumer; Wholesale electricity market; Spain; Demand response; Real-time pricing; Voluntary price for the small consumer; Energy saving; Load-shifting; Wholesale electricity market
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2016.11.040

In 2013, a period of reform was initiated of the regulatory framework of the Spanish electricity sector. A year later, the methodology for the calculation of the Voluntary Price for the Small Consumer (VPSC) was approved: a real-time price tariff for small domestic consumers. Under this price-setting system, VPSC consumers are billed according to their hourly consumption and hourly prices along the day. Directive 27/2014/EU, on energy saving, was also transposed to Spanish regulation in 2014.
The impact on the Spanish electricity market and domestic VPSC consumers of these two recent energy policy modifications are analyzed in this work. A qualitative model, based on the flexibility of the merit-order curves, is first introduced to formulate a number of hypotheses. A set of scenarios are then examined to quantify the main effects on the market and on domestic consumers.
The results show that domestic energy-saving, and, to a lesser extent, load-shifting scenarios, can diminish the mean hourly price and the cost of the annual traded energy in the market. Nevertheless, these reductions are mainly granted to large qualified consumers, since domestic consumers mostly benefit from the reduction of their energy demand rather than from a reduction of the price.
Load saving and load-shifting performed by small VPSC consumers reduces the hourly clearing price and the traded energy leading to some rent transfer from the generators to the purchasing agents.
The cost saving for VPSC consumers is mainly related to the energy they saved. They profit only partially from the market cost saving. [Display omitted]
•Merit-order effect related to energy saving and load-shifting are identified.•Domestic consumers are able to conduct energy saving and load-shifting at no cost.•Cyclic load-shifting reduces the traded energy and the economic cost in the market.•Rent transfer form generators to purchasing agents catalyzed by costumers’ saving.•Economic signals seem very weak to engage domestic consumers in demand response.