A smarter grid: can real-time electricity tariffs reduce both CO2 and bills?
Supplying electricity at a fixed price can have damaging consequences: there must be enough power to meet peak demand, typically early evenings on winter weekdays. Always meeting demand is made harder by weather-dependent intermittent renewables, such as wind and solar. During summer weekends, demand might even be less than the available low carbon, low running cost, generation. Adopting a system that encourages shifting of demand could help to tackle this problem. The National Grid balances supply and demand using a spot market, with generators selling, and retail supply companies buying. Charging customers using a real-time retail tariff based on the market price, could incentivise users to avoid expensive times and move to cheap times, resulting in fewer gas plants and less need for distribution capacity.
