The Power Tariffs Impact on Electricity Costs for Single-family Homes

The design of power-based tariffs within electricity distribution pricing models is currently subject to extensive discussion, and the planned regulatory requirement for Swedish distribution system operators (DSOs) to implement such tariffs has been postponed. Power-based tariffs are intended to provide economic incentives for households to shift electricity consumption over time and reduce peak power demand during periods of high load in the electricity grid. However, the specific design of these tariffs strongly influences the extent to which single-family homeowners can respond to tariff signals and manage their power-related costs. This project investigates how different power tariff designs affect households’ ability to align electricity use with tariff structures and thereby reduce overall electricity costs.

Within the project, we assess how the introduction of power-based tariffs may affect electricity costs for Swedish single-family homes with electric heating, in the form of heat pumps, and with electric vehicles charged at home. Using simulation-based analyses, the project examines how electricity costs vary depending on a range of factors, including geographical location, local distribution network conditions, electricity price areas, building characteristics, and the presence of electric vehicles.

The project further analyses households’ potential to influence their electricity costs through control of major electrical loads, such as heat pumps and electric vehicle charging, as well as through the use of energy storage systems to reduce peak power demand and shift electricity consumption to hours with lower electricity prices. In addition, the project contributes to international knowledge exchange through participation in IEA Heat Pumping Technologies Project 70, a recently launched collaborative initiative focusing on flexibility provided by heat pumps.

The overall objective of the project is to contribute new knowledge on the potential for single-family homes to reduce electricity costs through smart control strategies that account for both energy- and power-based costs. The project evaluates to what extent simple rule-based control approaches may be sufficient, compared with more advanced control algorithms. In the longer term, the project aims to support the development of new products and services for the control of residential electrical loads. Furthermore, the project seeks to generate insights that can assist distribution system operators in designing electricity grid tariff models that effectively contribute to relieving network congestion during periods of high load.