Cost Reflective Pricing RFP

Tender description

What pricing structure for energy would best facilitate the trilemma of secure, affordable, low carbon energy? The price of electricity is a key factor in the adoption of many low carbon technologies such as Solar PV, electric vehicles or heat pumps. However, the vast majority of customers pay the same price per unit 24 hours a day, 365 days a year despite huge variations in the wholesale price of electricity and potential capacity limitations in the networks. Does this have the potential to distort our path to decarbonisation? Would a more cost-reflective approach to electricity pricing lead to different technologies being adopted and ultimately save money? The advent of the smart meter enables the adoption of more cost reflective tariffs and this project will explore: • the cost base of electricity, gas and heat networks; • what a cost reflective tariff for each would look like, and • how it would alter the business case for adopting different low carbon technologies.