Abstract (eng)
In the current research the problem of inefficient energy consumption in low-income countries is elaborated. Inefficient consumption occurs due to low energy tariff levels and inefficient price policies. Therefore, the purpose of this research is to estimate the effectiveness of dynamic tariffs for the reduction of inefficient consumption, as well as to estimate the possibility of their implementation in low-income countries.
The research is based on the observation of the Ukrainian residential electricity market.
In order to fulfill purposes of the research, this study provides an analysis of the current technical, market and economic potential for the implementation of dynamic tariffs in the Ukrainian market, as well as a laboratory experiment, where the behavior of electricity consumers is examined under three different pricing environments: fixed price (FP); time-of-use tariff (TOU) and real-time pricing (RTP). Under fixed price, the tariff for electricity remains unchanged and depends only on the quantity of consumed electricity. The other two policies are dynamic tariffs, which aim to diminish the electricity consumption at time of high demand for electricity, or peak time.
Under each price policy participants of the experiment take decisions concerning the quantity of electricity they would like to consume.
In parallel with low tariff levels, the current research includes the problem of strong income polarization that is common for low-income countries. Therefore, participants of the experiment are divided into two income groups, and represent consumers of low- and high-income levels.
The statistical analysis of data obtained from the experiment has shown the following results. Under both dynamic tariffs participants have shifted their consumption from more “expensive” to the less “expensive” times. The peak electricity consumption was reduced by 55% under TOU tariff and by 46% under RTP. However, under both dynamic tariffs the peak load reduction was lower than it had been expected. The initial income level of participants did not affect their willingness to respond to price signals. The difference in demand response among income groups was statistically insignificant at the 95% confidence level.
Therefore, based on the results of the experiment, we may conclude that dynamic tariffs can be an effective tool for the reduction of peak electricity consumption in low-income countries. In spite of low tariff levels and strong income polarization, consumers of different income groups respond to price signals. As a result, demand for electricity decreases in peak time.
Nevertheless, the estimation of the possibility to implement dynamic tariffs in the Ukrainian electricity market has shown that Ukraine does not have sufficient technical and economic potential for their implementation. The main barriers for the implementation of dynamic tariffs in low-income countries are low level of energy sector privatization, and high costs for the necessary equipment. To foster development of dynamic tariffs in the Ukrainian residential electricity market, the technical and economic potential should be improved. The observation of the experience of different countries suggests that potential for the implementation of dynamic tariffs can be significantly improved through the liberalization of the energy market and inclusion of differential energy pricing system in a national plan of the effective energy use.