Solar and storage groups call for dynamic pricing of electricity in California

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As the enabling technologies of battery storage, electric vehicles, and automated demand response technology become more common, the time is right for a rulemaking on dynamic pricing, suggests a petition submitted to California regulators.

Dynamic or real-time pricing can make room for more solar and wind power on the grid, by shifting consumption to times of high solar and wind generation. Yet the key selling point for dynamic pricing could be its potential to cut costs both for customers, who can buy more of their electricity when prices are low, and for the system as a whole, due to reductions in peak demand. The petition cited several examples:

  • In California, system-wide savings from storage installed under the state’s SGIP program would increase from an estimated $4/kW installed to $83/kW with dynamic pricing, per a study by Itron.
  • In Illinois, the 30,000 residential customers who participate in real-time-pricing have saved $28 million to date, per a Citizens Utility Board paper.
  • In Spain, 10 million households are enrolled in real-time pricing, per a presentation made to the California Public Utilities Commission (CPUC), which suggests that they find it advantageous.
  • In Georgia, Illinois, and New York, thousands of non-residential customers use real-time pricing.

The petition also commends San Diego Gas & Electric for its pilot program for dynamic pricing for electric vehicle charging.

Dynamic prices may be set by referencing wholesale electricity markets, which use a real-time locational marginal price.

The petition was submitted to the CPUC by California Solar & Storage Association and several joint petitioners: California Energy Storage Association, Enel X, ENGIE Services, ENGIS Storage, OhmConnect, Inc., Solar Energy Industries Association, and Stem, Inc.

Beyond proposing that all customers have the option to choose real-time pricing at the hourly or sub-hourly level, the petition also calls for the CPUC to consider whether to make available “other, less complex, dynamic rates” as well. The petition gives the example of Oklahoma Gas & Electric’s summertime weekday peak pricing option. In that program, prices range from 5 cents to 41 cents per kWh, and customers who opt in receive a free programmable communicating thermostat that responds to price signals automatically according to the customer’s preferences.

Raising another broad topic, the petition also calls for reform of demand charges, as part of the requested rulemaking process.

The petition has triggered an active CPUC proceeding.