Non-fiscal price incentives
The energy-efficiency impact of differentiated energy prices

At the request of the Dutch Ministry of  the Interior and Kingdom Relations (BZK), CE Delft has carried out an exploratory study on the potential impact of non-fiscal energy incentives. The study will feed into the Ministry’s policies on energy efficiency in the built environment. The study takes in both electricity and gas, and private dwellings as well as utility buildings. The following non-fiscal price incentives were considered:  

  • consumer prices indexed to consumption volume
  • consumer prices indexed to time of consumption
  • the energy-efficiency impact of ‘autonomous’ increases in energy prices. 

The energy-efficiency effects of price changes (options 1 and 3) were calculated on the basis of price elasticities, while for option 2 use was made of the results of the Social Cost-Benefit Analysis of Smart Grids carried out by CE Delft in collaboration with KEMA.

The conclusions of the study are as follows:

  • Although differentiating consumer prices by consumption volume may yield energy savings of up to 2%, this would require market agreements in breach of the competition rules underpinning the liberalised energy market. This option is therefore unfeasible via consumer prices.
  • The energy savings accruing from indexing consumer prices to time of consumption are uncertain, as the main impact will be a temporal shift in consumption. This option is highly feasible, as such differentiation will in all likelihood evolve of its own accord with the roll-out of smart meters and smart grids.
  • The energy-efficiency impact of autonomous energy price rises is 0.2 to 0.4% per annum.