Italian energy retail: uptake of 'smart tariffs' expected to be low

                                                                                         

Italian energy giant Enel has recently released its new time-based pricing plan for residential customers. However, the uptake of this product is likely to be minimal, as consumer awareness of supplier and pricing plan choices is still low. Nevertheless, Enel should not be put off by the low uptake, as the offering is likely become more popular as it becomes more developed.
Italian energy provider Enel has recently announced new pricing plan options for residential customers who have been fitted with smart meters. Enel has promoted an alternative pricing plan that has different prices for consumption between 8am and 7pm, and from 7pm to 8am the next day. The introduction of time-based pricing is a bold move for a supplier. Residential customers are unlikely to fully understand the rationale behind time-based pricing or their individual patterns of energy use in the home, leaving those such as shift workers who may benefit from this pricing structure unaware of the potential advantages.
A further reason behind why uptake will be low initially is that initiating a change in pricing plan requires the customer to take action. With domestic retail competition still very much in its infancy in Italy, it is likely that only a small number of households are aware that they have a choice of supplier, let alone options regarding the pricing plan that they are billed against.
If Enel changed all customers to its time-based pricing scheme (with those customers who are opposed to the proposition able to choose an alternative fixed-price plan) the firm would change the vast majority of customers onto the time-based scheme. This would give customers more exposure to smart tariffs, sparking a higher uptake of future evolutions of this kind of pricing plan.
The limited structure of the current pricing propositions is certain to change to a more dynamic structure in the future, with smart meters being utilized to their full potential. The result could be a reduction in demand peaks, which could lead to savings in generation, transmission and distribution assets, bringing all-round benefits to the industry as a whole. Enel has taken a step towards implementing smart tariffs to go with its smart meters. However, the firm should not be put off by the potentially low uptake of its intermediate structure, as a fully dynamic pricing set-up will provide benefits to Enel, customers and the rest of the industry alike.

About the author:
Velimir Lackovic runs internet portal "Energetika" ( http://www.energetika.co.yu )
dedicated to renewable energy sources,oil gas and energy efficiency. Velimir has
completed gratuadte studies in power systems engineering and
has industry experiance of over 20 years in this field.

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