Electricity pricing

These utility companies can exercise their political power within existing legal and regulatory regimes to guarantee a financial return and reduce competition from other sources like a distributed generation.

[4] In standard regulated monopoly markets like the United States, there are multilevel governance structures that set electricity rates.

Time of use (TOU) tariffs can shift electricity consumption out of peak periods, thus helping the grid cope with variable renewable energy.

[11] The FIT contract contains a guaranteed period of time (usually 15–20 years) that payments in dollars per kilowatt hour ($/kWh) will be made for the full output of the system.

Residential customers with rooftop photovoltaic (PV) systems will typically generate more electricity than their home consumes during daylight hours, so net metering is particularly advantageous.

[15][16] In the United States, 70% of current coal-fired power plants run at a higher cost than new renewable energy technologies (excluding hydro) and by 2030 all of them will be uneconomic.

Over the last 30 years electricity price forecasts have become a fundamental input to energy companies’ decision-making mechanisms at the corporate level.

[18] Since the early 1990s, the process of deregulation and the introduction of competitive electricity markets have been reshaping the landscape of the traditionally monopolistic and government-controlled power sectors.

Throughout Europe, North America, Australia and Asia, electricity is now traded under market rules using spot and derivative contracts.

[19] However, electricity is a very special commodity: it is economically non-storable and power system stability requires a constant balance between production and consumption.

[20] Excessive Total Harmonic Distortions (THD) and low power factor are costly at every level of the electricity market.