Which tariff to choose? How individual attitudes and preferences explain demand for flexible electricity tariffs in Germany

Abstract

Time-variant pricing and voluntary flexibility in private energy consumption have the potential to enhance demand sensitivity in electricity markets, playing crucial roles in the transition towards a greener energy system. This paper uses survey methods to examine the determinants of the stated willingness to adopt time-variant electricity tariffs. Based on a large population sample (N = 1200) from the most populous German federal state, North Rhine-Westphalia, we differentiate between the general willingness to adopt such tariffs and specific types, including time-of-use (TOU), critical-peak-pricing (CPP), and real-time-pricing (RTP) tariffs. Additionally, participants provide information on their willingness to adjust their electricity consumption in a timely manner. Our findings reveal that the stated willingness to adopt time-variant tariffs decreases as the potential price volatility increases. Moreover, there is a strong positive correlation between the willingness to adopt time-variant tariffs and the willingness to provide energy demand flexibility. The results of our analysis further indicate that early adopters of energy-efficient technologies and supporters of climate policies are more inclined towards time-variant pricing and providing flexibility in their electricity consumption. Economic preferences, such as loss aversion and present bias, appear to be particularly relevant for adopting the RTP tariff. These insights offer valuable guidance for promoting time-variant tariffs and flexible energy consumption, facilitating the adoption of efficient and sustainable energy systems.