Households with dynamic power tariffs see increased savings potential as renewables share rises – provider

As the share of renewables in Germany's electricity mix increases, so does the potential for households to benefit from lower wholesale power prices. In the first half of the year, households with a dynamic electricity contract which adapted their consumption to the hours when electricity was plentiful and therefore cheapest saved up to 34 percent in electricity prices compared to the average power exchange price, according to smart home company tado°. In the first half of 2023, possible electricity price savings amounted to just over 20 percent, while potential savings stood at 17 percent during the same period in 2022. The savings as defined by tado exclude grid fees and other charges, which make up about half of household electricity bills.

At times of high sunshine and wind, electricity prices in the European power exchange drop and can even turn negative, meaning that customers with dynamic contracts can be rewarded for charging their electric vehicle or using their washing machines in these hours. Flexible electricity demand is a key to helping stabilise the future electricity system based mainly on fluctuating renewables. Information technologies can enable ways to balance supply and demand – for example by managing the power consumption of household appliances, or integrating electric vehicle batteries into the power system.

Energy providers in Germany will be required to offer dynamic electricity tariffs from 2025. However, the installation of smart meters, which allow for a digitalised operation of the electricity grid with real-time data and are requirement for this type of contract, has so far been slowed by legal uncertainties and bureaucratic hurdles.