What is a dynamic electricity tariff?
The dynamic electricity tariff, which can also be called a flexible electricity tariff or variable electricity tariff, describes the innovative and flexible pricing for electrical energy.
Traditional electricity tariffs include fixed prices for kilowatt hour as well as network charges and other charges. With dynamic electricity tariffs, the price changes on a daily or hourly basis and thus adapts to fluctuations on the electricity market.
The price flexibility reflects the actual costs of generating and providing electricity, which are influenced, for example, by supply and demand or the availability of renewable energy.
This is how dynamic electricity tariffs work
Dynamic electricity tariffs basically reflect the current market situation and are linked to the concept of real-time pricing. Electricity prices may vary according to time of day, current total network consumption, or weather conditions.
If demand is high and/or renewable energy generation is low (for example in the evening when people are off work and solar energy can no longer be produced), prices generally rise. If a lot of energy can be generated from renewable sources and/or if demand is low, prices usually fall accordingly.
Benefits of dynamic electricity tariffs
- Cost savings and efficiency: For consumers who can flexibly manage their own electricity consumption (for example by adapting everyday life or using technology), dynamic electricity tariffs can help to reduce costs - for example by moving consumption to times of low electricity prices
- Promoting renewable energy: If electricity consumption can be adjusted to the availability of renewable energy, this can support integration and expansion
- grid stability: With variable electricity tariffs, energy peaks can be smoothed out and the stabilization of the power grid can be supported with uniform utilization
Challenges of flexible electricity tariffs
- accessibility: Constantly changing prices add a higher level of complexity, which is a hurdle for some consumers
- infrastructure: Digital meter systems or smart meters are necessary for the full usability of dynamic electricity tariffs
The future of dynamic electricity tariffs
The future of dynamic electricity tariffs is certain, because from 2025, energy suppliers will be required by the Federal Office for Economic Affairs and Climate (BMWK) to offer customers at least one dynamic electricity tariff.