Electricity pricing

Electricity pricing (also referred to as electricity tariffs or the price of electricity) can vary widely by country or by locality within a country. Electricity prices are dependent on many factors, such as the price of power generation, government taxes or subsidies, local weather patterns, transmission and distribution infrastructure, and multi-tiered industry regulation. The pricing or tariffs can also differ depending on the customer-base, typically by residential, commercial, and industrial connections.

According to the U.S. Energy Information Administration (EIA), "Electricity prices generally reflect the cost to build, finance, maintain, and operate power plants and the electricity grid." Where pricing forecasting is the method by which a generator, a utility company, or a large industrial consumer can predict the wholesale prices of electricity with reasonable accuracy.[1] Due to the complications of electricity generation, the cost to supply electricity varies minute by minute.[2]

Some utility companies are for-profit entities and their prices include a financial return for owners and investors. 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.[3]

Rate structure

In standard regulated monopoly markets like the United States, there are multilevel governance structures that set electricity rates. The rates are determined through a regulatory process that is overseen by a Public Service Commission. In addition, the Federal Energy Regulatory Commission (FERC) oversees the wholesale electricity market along with the interstate transmission of electricity. Public Service Commissions (PSC), which are also known as Public utilities commission (PUC), regulate utility rates within each state.

The inclusion of renewable energy distributed generation (DG) and advanced metering infrastructure (AMI or smart meter) in the modern electricity grid has introduced many alternative rate structures.[4] There are several methods that modern utilities structure residential rates:

  • Simple (or fixed) – the rate at which customers pay a flat rate per kWh
  • Tiered (or step) – rate changes with the amount of use (some go up to encourage energy conservation, others go down to encourage use and electricity provider profit)
  • Time of use (TOU) – different rate depending on the time of day
  • Demand rates – based on the peak demand for electricity a consumer uses
  • Tiered within TOU – different rates depending on how much they use at a specific time of day
  • Seasonal rates – charged for those that do not use their facilities year-round (e.g. a cottage)
  • Weekend/holiday rates – generally different rates than during normal times. among the few residential rate structures offered by modern utilities.

The simple rate charges a specific dollar per kilowatt ($/kWh) consumed. The tiered rate is one of the more common residential rate programs. The tiered rate charges a higher rate as customer usage increases. TOU and demand rates are structured to help maintain and control a utility's peak demand.[5] The concept at its core is to discourage customers from contributing to peak-load times by charging them more money to use power at that time. Historically, rates have been minimal at night because the peak is during the day when all sectors are using electricity. Increased demand requires additional energy generation, which is traditionally provided by less efficient "peaker" plants that cost more to generate electricity than "baseload" plants.[6] However, as greater penetration from renewable energy sources, like solar, are on a grid the lower cost, electricity is shifted to midday when solar generates the most energy.

A feed-in tariff (FIT)[7] is an energy-supply policy that supports the development of renewable power generation. FITs give financial benefits to renewable power producers. In the United States, FIT policies guarantee that eligible renewable generators will have their electricity purchased by their utility.[8] 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.

Net metering is another billing mechanism that supports the development of renewable power generation, specifically, solar power. The mechanism credits solar energy system owners for the electricity their system adds to the grid. 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. During this time where generation is greater than consumption, the home's electricity meter will run backward to provide a credit on the homeowner's electricity bill.[9] The value of solar electricity is less than the retail rate, so net metering customers are actually subsidized by all other customers of the electric utility.[10]

Price comparison by power source

The cost of electricity also differs by the power source. The net present value of the unit-cost of electricity over the lifetime of a generating asset is known as the levelized cost of electricity (LCOE). LCOE is the best value to compare different methods of generation on a consistent basis.

In the United States the Energy Information Administration (EIA) estimated LCOE for different sources in their Annual Energy Outlook 2019 to be:[11]

Generation Source Total LCOE Including Tax Credit (2018 $/MWh)
Hydro 39.1
Solar PV 45.7
Wind (onshore) 49.8
Gas Combined Cycle 46.3–67.5
Nuclear 77.5
Biomass 92.2
Coal 98.6–104.3

The generating source mix of a particular utility will thus have a substantial effect on their electricity pricing. Electric utilities that have a high percentage of hydroelectricity will tend to have lower prices, while those with a large amount of older coal-fired power plants will have higher electricity prices. Recently the LCOE of solar photovoltaic technology[12] has dropped substantially.[13][14] 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.[15] In the rest of the world 42% of coal-fired power plants were operating at a loss in 2019.[15]

Price comparison across countries

The table below shows a simple comparison of electricity tariffs in industrialized countries and territories around the world, expressed in US dollars. The comparison does not take into account factors including fluctuating international exchange rates, a country's purchasing power, government taxes and subsidies on electricity or retail discounts that are often available in deregulated electricity markets.[16][17]

For example, in 2012, Hawaii residents had the highest average residential electricity rate in the United States (37.34¢/kWh), while Louisiana residents had the lowest average residential electricity costs (8.37¢/kWh). Even in the contiguous United States, the gap is significant with New York residents having the highest average residential electricity rates in the lower 48 U.S. states (17.62¢/kWh).[18]

Global comparison
Country/territory Price/kWh Price/megajoule Date Source
American Samoa 25.4 to 30 May 2017 [19]
Argentina 0.4607 (subsidized) 12 December 2018 [16]
Australia varies by state and by time of day (peak/shoulder/off peak) from 15–54 cents AUD (10.71-38.57 cents USD) per kWh; service availability charge of $0.95 AUD a day 6.11 to 11.06 6 February 2018 [20][21][22]
Bahrain 0.79 to 4.23 (0.79 for first 3000 kWh; 2.38 for 3001–5000 kWh and 4.23 for every additional kWh. Exchange rate used from BHD to USD is 0.378) 19 August 2015 [23]
Bangladesh 2.95 to 9.24 13 March 2014 [24]
Belarus 13.8 to 69.8 21 June 2016 [25]
Belgium €0.2908 8.08 July 2019 [26]
Bhutan 1.811 to 5.05 (1.811 for first 100 kWh; 3.79 for 101 to 500 kWh; 5.05 for above 500 kWh) 1 October 2019 [27]
Brunei 0.72 to 8.64 (0.72 for first 600 kWh; 5.76 for 601–2000 kWh; 7.20 for 2001–4000 kWh and 8.64 for every additional kWh. Exchange rate used from BRR to USD is 0.72) 18 June 2017 [28]
Bulgaria 13.38 day (between 7:00–23:00 DST); 9.13 night 2.54 to 3.72 29 October 2014 [29][30][31]
Brazil 12.00 to 25.00 varying by state and Electricity Service Provider 7 July 2016 [32]
Cambodia 15.63 to 21.00 in Phnom Penh 4.34 to 5.83 28 February 2014 [33]
Canada, Ontario 14.6 2017–2018 [34]
Canada, Ontario, Toronto 10.1 to 20.8 depending on time of day plus transmission, delivery, and other charges of about 3.75 per kWh 1.81 to 3.25 1 November 2019 [35]
Canada, Quebec 4.57 for the first 40 kWh/day, then 7.04 + 30.52/day for subscription fee (all converted to USD on 10 October 2019) 10 October 2019 [36]
China 4 to 4.5 2014 [37]
Chile 23.11 1 January 2011 [38][39]
Colombia (Bogota) 18.05 1 June 2013 [40]
Cook Islands 34.6 to 50.2 [41]
Croatia 17.55 1 July 2008 [42]
Curaçao 26.58 to 35.08 1 August 2017 [43]
Denmark 40(25% VAT + another 40% electricity tax are included in this price) July 2019 [26]
United Arab Emirates- Dubai 6.26 to 10.35 (plus 1.63 fuel surcharge) [44]
United Arab Emirates- Abu Dhabi 0 to 8.23 (i.e. AED 0 to AED 0.305) 2017 [45]
Egypt Priced into sections at a kWh/month, subsidized
E£ 0.38 0–50 kWh/M
E£ 0.48 51-100 kWh/M
E£ 0.65 101–200 kWh/M
E£ 0.96 201–350 kWh/M
E£ 1.28 351–650 kWh/M
E£ 1.45 650+ kWh/M
 9 June 2020 [46][47]
Estonia €0.046 to 0.080 13 July 2020 [48]
Ethiopia 6.7 to 7.7[a] 31 December 2012 [49]
Fiji 12 to 14.2 [41]
Finland €0.1373 July 2018 [26]
France €0.1939 July 2019 [26]
Georgia All converted to USD on 10 October 2019 – Excludes VAT of 18%

Up to 101 kWh per day: 3.85
101 to 301 kWh per day: 4.57
301 kWh per day and more: 5.06

10 October 2019 [50]
Gibraltar 14.4 4 January 2018 [51]
Germany €0.31234 July 2019 [26]
Romania 18.40 26 June 2013 [52]
Guyana 26.80 1 April 2012 [53]
Switzerland 25.00 6 January 2014 [54]
Hungary €0.2344 July 2019 [26]
Hong Kong 12.04 to 24.05 1 January 2013 [55][56]
India 0.01 to 0.18 (Average 0.07) US$/KWh 1 March 2014 [57]
Indonesia
R-1/450 VA Subsidized 3.07
R-1/900 VA Subsidized 4.1
R-1/900 VA-RTM (Capable Household) Non-subsidized 9.4
R-1/1300 VA Non-subsidized 10.27
R-1/2200 VA Non-subsidized 10.27
R-2/3500 VA, 4400 VA, 5500 VA Non-subsidized 10.27
R-3/6600 VA and above Non-subsidized 10.27
 30 November 2017 [58]
Iceland 5.54 8 November 2015 [59]
Iran 2 to 19 1 July 2011
Iraq Residential pricing per kWh used, subsidized[a]
2.5 0–500 kWh/M
4.17 501–1000 kWh/M
7.5 1001–1500 kWh/M
11.67 1501–2000 kWh/M
14.17 2001–3000 kWh/M
16.67 3001–4000 kWh/M
18.75 > 4001 kWh/M
 8 April 2015 [60]
Ireland 23.06 1 November 2016 [61]
Israel 15.35[a] 8 May 2017 [62]
Italy €0.2839 July 2019 [26]
Jamaica 44.7 4 December 2013 [63]
Japan 20 to 24 31 December 2009 [64][65]
Jordan 5[a] to 33 30 January 2012 [66]
Kazakhstan 4.8 to 8.2 13 December 2016
Kiribati 32.7 [67]
South Korea Priced into a sliding scale at a kWh/month, residential service (low-voltage)[a]

8.1 @ 0–200 kWh/M
16.4 @ 201–400 kWh/M
24.5 @ 401- kWh/M

62.0 @ 1001- kWh/M (only for Jul–Aug, Dec–Feb)

Demand charge(0.76–6.38USD) 10% VAT, 3.7% green energy fund are not included

 1 December 2016 [68]
Kuwait 0.3 to 3 1 January 2016 [69]
Laos 11.95 for >150 kWh, 4.86 for 26–150 kWh, 4.08 for 0–25 kWh 28 February 2014 [70][71]
Latvia 19.16 calculated for 100 kWh including transport, green energy tax and VAT 1 September 2019 [72]
Lithuania 12 1 July 2016 [73]
Malaysia Domestic consumer pricing per kWh used, subsidized

4.95 @ 1 to 200 kWh
7.59 @ 201 to 300 kWh
11.73 @ 301 to 600 kWh
12.41 @ 601 to 900 kWh
12.98 @ 901 kWh onwards
(exchange rate of 4.4 MYR to US$1 on 24 November 2016)

 1 January 2014 [74]
Marshall Islands 32.6 to 41.6 [75]
Mexico 19.28[b] 22 August 2012 [76][77]
Moldova 11.11 1 April 2011 [78]
Mozambique 1.1 Oct 2018
Myanmar 3.6 28 February 2014
Nepal 7.2 to 11.2 16 July 2012 [79]
Netherlands €0.2889 July 2019 [26]
New Caledonia 26.2 to 62.7 [41]
New Zealand 19.67 16 November 2018
Nicaragua Priced into a sliding scale at a kWh/month,[a] residential T-0

10 @ 0–25 kWh/M
21 @ 26–50 kWh/M
22 @ 51–100 kWh/M
29 @ 101–150 kWh/M
27 @ 151–500 kWh/M
43 @ 501–1000 kWh/M
48 @ 1000+ kWh/M

1 September 2014 [80]
Niue 44.3 [67]
Nigeria 2.58 to 16.55 2 July 2013 [81]
North Macedonia 6 US cents (nighttime) to 12 US cents (daytime), 18% VAT included. 1 August 2013 [82]
Norway 1.916 coal-fired power average

5.8 hydroelectric power average

 7 December 2020
Pakistan General Supply Tariff – Residential

2 < 50 kWh/M
5.79 @ 1–100 kWh/M
8.11 @ 101–200 kWh/M
10.21 @ 201–300 kWh/M
16 @ 301–700 kWh/M
18 >700 kWh/M

14 July 2015 [83]
Palau 22.83 [67]
Papua New Guinea 19.6 to 38.8 [41]
Paraguay General Supply Tariff – Residential

5.66 @ 0 – 50 kWh/M
6.36 @ 51 – 150 kWh/M
6.64 @ 151 – 300 kWh/M
7.34 @ 301 – 500 kWh/M
7.64 @ 501 – 1000 kWh/M
7.92 >1000 kWh/M
General Supply Tariff – Industrial
7.36 kWh/M
(exchange rate: US$1 = 5,500 PYG)

 2017 [84]
Peru 17.70 19 January 2018 [85]
Philippines 18.22

Palawan 25.2

 7 October 2015 [86]
Portugal €0.2525 July 2019 [26]
Russia 2.4 to 14 1 November 2011
Rwanda 22 to 23.6
 2016 [87]
Saudi Arabia for Residential (1–6000 Kwh = 4.8 cents, more 6000 kwh = 8 cents)

for Commercial (1–6000 Kwh = 5.3 cents, more 6000 kwh = 8 cents)
for Agricultural & Charities(1–6000 Kwh = 4.3 cents, more 6000 kwh = 5.3 cents)
for Governmental (kwh = 8.5 cents)
for Industrial (kwh = 4.8 cents)
for Private educational, private medical(kwh = 4.8 cents)

 15 January 2018 [88]
Serbia 3.93 to 13.48, average ~6,1[d] 28 February 2013 [89]
Singapore 14.28 10 August 2020 [90]
Sri Lanka Priced into sections at a kWh/month, subsidized[a]

1.62 @ 0–30 kWh/M + fixed charge/M USD 0.20
3.16 @ 31–60 kWh/M + fixed charge/M USD 0.39
5.11 @ 0–60 kWh/M + fixed charge/M N/A
6.51 @ 61–90 kWh/M + fixed charge/M USD 0.59
18.09 @ 91–120 kWh/M + fixed charge/M USD 3.14
20.86 @ 121–181 kWh/M + fixed charge/M USD 3.14
29.33 @ > 180+ kWh/M + fixed charge/M USD 3.53
(exchange rate of 153.03 LKR to US$1 on 23 August 2017)

 23 August 2017 [91][92]
Solomon Islands 88 to 99 [93]
South Africa 15 29 September 2015 [94][95]
Spain About €0,23 per KWh

(21% VAT + another 6% electricity tax are included in this price)

 December 2017 [96]
Surinam 3.90 to 4.84 20 November 2013 [97]
Sweden 9 July 2019 [26]
Tahiti 25 to 33.1 [41]
Taiwan Priced into a sliding scale at a kWh/month, residential service (low-voltage)[a]

5.4 @ 0–120 kWh/M
7.9 @ 121–330 kWh/M (only for Jun – Sep)
11.7 @ 331–500 kWh/M (only for Jun – Sep)

15.3 @ 501–700 kWh/M (only for Jun-Sep)

18.1 @ 701–1000 kWh/M (only for Jun-Sep)

20.4 @ 1000- kWh/M (only for Jun – Sep)


7.0 @ 121–330 kWh/M (only for Oct – May)
9.6 @ 331–500 kWh/M (only for Oct – May)

12.6 @ 501–700 kWh/M (only for Oct-May)

14.8 @ 701–1000 kWh/M (only for Oct-May)

16.1 @ 1000- kWh/M (only for Oct – May)

(exchange rate of 30 TWD to US$1)

 27 August 2017 [98]
Thailand Priced into a sliding scale at a kWh/month, residential service (low-voltage)[a]

7.1 First 15 kWh (1st – 15th )
9 Next 10 kWh (16th – 25th)
9.81 Next 10 kWh (26th – 35th)
10.98 Next 65 kWh (36th – 100th)
11.26 Next 50 kWh (101st – 150th)
12.79 Next 250 kWh (151st – 400th)
13.4 Over 400 kWh (up from 401st)

  • calculation at exchange rate 33 Baht to 1 dollar
 5 January 2018 [99]
Tonga 47 1 June 2011 [41]
Trinidad and Tobago 4 (residential)

20 (industry)

 8 July 2015 [100]
Tunisia Priced into a sliding scale at a kWh/month, residential service (low-voltage)

2.5 @ 0 – 50 kWh
3.6 @ 51 – 100 KWh
7.3 @ 101 – 300 kWh
9.8 @ 301 – 500 kWh
12.0 @ > 501 kWh
(exchange rate of 1 TND to US$0.33)

 1 September 2018 [101]
Turkey 11.20 residential (Low voltage)

11.29 business (Low voltage)

8.78 industry (Medium voltage)

 1 July 2016 [102]
Turks and Caicos Islands 39.81 6 February 2020 [103]
Tuvalu 36.55 [67]
Uganda 4.44 (first 15 kWh in a month for domestic consumers)

21 (above 15 kWh in a month for domestic consumers)

18 Commercial Consumers ( 3 phase 415V <100 A)

17 Medium Industrial Consumers (3 phase 415 V <500 kVA)

10 Large Industries (11 kV or 33 kV 500 kV< demand < 1500 kVA)

8.5 Extra large Industrias (11 kV or 33 kV >1500 kVA)

20 Street Lighting

 13 January 2019 [104]
Ukraine 2.6 to 10.8 2017 [105][106]
United Kingdom €0.15591 July 2019 [26][107]
United States $0.0937 to $0.2254 1 June 2018 [108][109]
United States Virgin Islands 48.9 to 51.9 1 October 2014 [110]
Uruguay 17.07 to 26.48 11 February 2014 [111]
Uzbekistan 4.7 (450 UZS per kWh, based on UZS to USD conversion rate of 9,574 UZS to USD) 15 August 2019 [112]
Vanuatu 60 [41]
Venezuela 6.12 at official exchange rate (9.975 VEF/USD) 1 December 2016 [113]
Vietnam 7.2 to 13.0 2019 [114]
Western Samoa 30.5 to 34.7 [41]
Zambia Residential tariff: first 200 kWh in a month, it is about 2 cents (exchange rate varies)

Then above 200 kWh usage in a month, rate is 9 cents.

 16 August 2017 [115]

a Denotes countries with government subsidized electricity tariffs.[116][117][118]

b Mexico subsidizes electricity according to consumption limits. More than 500 kWh consumed bimonthly receive no subsidies. Only 1% of Mexico's population pays this tariff.[119]

c Hawaii.

d Prices don't include VAT (20%)

e San Diego, California high-tier

The U.S. Energy Information Administration (EIA) also publishes an incomplete list[120] of international energy prices, while the International Energy Agency (IEA) provides a thorough, quarterly review.[121]

Eurostat
Electricity price statistics, Europe 2019[122]

The following table shows electricity prices both for household and non-household consumers within the European Union (EU) and Iceland, Liechtenstein, Norway, Albania, North Macedonia, Montenegro, Serbia, Turkey, Bosnia and Herzegovina, Kosovo, Moldova, and Ukraine.[123]

H2 2017 electricity prices (Euro per kWh)[123]
Country Households Non-household
 Albania0.086–
 Austria0.1980.100
 Bangladesh0.1860.107
 Belgium0.2880.109
 Bulgaria0.0980.074
 Croatia0.1240.092
 Cyprus0.1830.139
 Czech Republic0.1490.071
 Denmark0.3010.098
 Estonia0.1320.085
 Finland0.1600.068
 North Macedonia0.0810.056
 France0.1760.092
 Germany0.3050.151
 Greece0.1620.119
 Hungary0.1130.078
 Iceland0.152-
 Ireland0.2360.124
 Italy0.2080.145
 Kosovo0.0650.080
 Latvia0.1580.116
 Lithuania0.1110.083
 Luxembourg0.1620.078
 Malta0.1360.138
 Moldova0.1010.085
 Montenegro0.1000.077
 Netherlands0.1560.076
 Norway0.0490.038
 Poland0.1450.086
 Portugal0.2230.115
 Romania0.1290.079
 Serbia0.0700.075
 Slovakia0.1440.111
 Slovenia0.1610.078
 Spain0.2180.103
 Sweden0.1990.065
 Turkey0.0960.060
 Ukraine0.038-
 United Kingdom0.1860.125
H1 2018 electricity prices (Euro per kWh)[124]
CountryHouseholdsNon-household
 Austria0.1970.100
 Belgium0.2860.108
 Bulgaria0.0980.074
 Croatia0.1310.098
 Cyprus0.1790.136
 Czech Republic0.1530.073
 Denmark0.3070.100
 Estonia0.1380.089
 Finland0.1630.069
 France0.1790.094
 Germany0.3070.153
 Greece0.1560.117
 Hungary0.1130.078
 Ireland0.2500.132
 Italy0.2150.150
 Latvia0.1580.116
 Lithuania0.1100.082
 Luxembourg0.1680.083
 Malta0.1360.138
 Netherlands0.1760.086
 Poland0.1450.086
 Portugal0.2280.117
 Romania0.1410.086
 Slovakia0.1480.114
 Slovenia0.1620.079
 Spain0.2230.106
 Sweden0.2130.069
 United Kingdom0.1900.127
 Norway0.0430.039

Electricity price forecasting

Electricity price forecasting is the process of using mathematical models to predict what electricity prices will be in the future.

Forecasting methodology

The simplest model for day ahead forecasting is to ask each generation source to bid on blocks of generation and choose the cheapest bids. If not enough bids are submitted, the price is increased. If too many bids are submitted the price can reach zero or become negative. The offer price includes the generation cost as well as the transmission cost, along with any profit. Power can be sold or purchased from adjoining power pools.[125][126][127]

The concept of independent system operators (ISOs) fosters competition for generation among wholesale market participants by unbundling the operation of transmission and generation. ISOs use bid-based markets to determine economic dispatch.[128]

Wind and solar power are non-dispatchable. Such power is normally sold before any other bids, at a predetermined rate for each supplier. Any excess is sold to another grid operator, or stored, using pumped-storage hydroelectricity, or in the worst case, curtailed.[129] Curtailment could potentially significantly impact solar power's economic and environmental benefits at greater PV penetration levels.[130] Allocation is done by bidding.[131]

The effect of the recent introduction of smart grids and integrating distributed renewable generation has been increased uncertainty of future supply, demand and prices.[132] This uncertainty has driven much research into the topic of forecasting.

Driving factors

Electricity cannot be stored as easily as gas, it is produced at the exact moment of demand. All of the factors of supply and demand will, therefore, have an immediate impact on the price of electricity on the spot market. In addition to production costs, electricity prices are set by supply and demand.[133] However, some fundamental drivers are the most likely to be considered.

Short-term prices are impacted the most by the weather. Demand due to heating in the winter and cooling in the summer are the main drivers for seasonal price spikes.[134] Additional natural-gas fired capacity is driving down the price of electricity and increasing demand.

A country's natural resource endowment, as well as its regulations in place greatly influence tariffs from the supply side. The supply side of the electricity supply is most influenced by fuel prices, and CO2 allowance prices. The EU carbon prices have doubled since 2017, making it a significant driving factor of price.[135]

Weather

Studies show that demand for electricity is driven largely by temperature. Heating demand in the winter and cooling demand (air conditioners) in the summer are what primarily drive the seasonal peaks in most regions. Heating degree days and cooling degree days help measure energy consumption by referencing the outdoor temperature above and below 65 degrees Fahrenheit, a commonly accepted baseline.[136]

In terms of renewable sources like solar and wind, weather impacts supply. California's duck curve shows the difference between electricity demand and the amount of solar energy available throughout the day. On a sunny day, solar power floods the electricity generation market and then drops during the evening, when electricity demand peaks.[130]

Hydropower availability

Snowpack, streamflows, seasonality, salmon, etc. all affect the amount of water that can flow through a dam at any given time. Forecasting these variables predicts the available potential energy for a dam for a given period.[137] Some regions such as Pakistan, Egypt, China and the Pacific Northwest get significant generation from hydroelectric dams. In 2015, SAIDI and SAIFI more than doubled from the previous year in Zambia due to low water reserves in their hydroelectric dams caused by insufficient rainfall.[138]

Power plant and transmission outages

Whether planned or unplanned, outages affect the total amount of power that is available to the grid. Outages undermine electricity supply, which in turn affects the price.[138]

Economic health

During times of economic hardship, many factories cut back production due to a reduction of consumer demand and therefore reduce production-related electrical demand.[139]

Global markets

The UK has been a net importer of energy for over a decade, and as their generation capacity and reserves decrease the level of importing is reaching an all-time high.[140] Their fuel price's dependence on international markets has a huge effect on the cost of electricity, especially if the exchange rate falls. Being energy dependent makes their electricity prices vulnerable to world events, as well.

Government regulation

Governments may choose to make electricity tariffs affordable for their population through subsidies to producers and consumers. Most countries characterized as having low energy access have electric power utilities that do not recover any of their capital and operating costs, due to high subsidy levels.[141]

In the United States, federal interventions and subsidies for energy can be classified as tax expenditure, direct expenditures, research and development (R&D), and DOE loan guarantees. Most federal subsidies in 2016 were to support developing renewable energy supplies, and energy efficiency measures.[142]

Power quality

Excessive Total Harmonic Distortions (THD) and low power factor are costly at every level of the electricity market. The impact of THD is difficult to estimate, but it can potentially cause heat, vibrations, malfunctioning and even meltdowns. The power factor is the ratio of real to apparent power in a power system. Drawing more current results in a lower power factor. Larger currents require costlier infrastructure to minimize power loss, so consumers with low power factors get charged a higher electricity rate by their utility.[143] Power quality is typically monitored at the transmission level. A spectrum of compensation devices[144] mitigate bad outcomes, but improvements can be achieved only with real-time correction devices (old style switching type,[145] modern low-speed DSP driven[146] and near real-time[147]). Most modern devices reduce problems, while maintaining return on investment and significant reduction of ground currents. Power quality problems can cause erroneous responses from many kinds of analog and digital equipment.

Phase balancing

The most common distribution network and generation is done with 3 phase structures, with special attention paid to the phase balancing and resulting reduction of ground current. It is true for industrial or commercial networks where most power is used in 3 phase machines, but light commercial and residential users do not have real-time phase balancing capabilities. Often this issue leads to unexpected equipment behavior or malfunctions and in extreme cases fires. For example, sensitive professional analog or digital recording equipment must be connected to well-balanced and grounded power networks. To determine and mitigate the cost of the unbalanced electricity network, electric companies charge by demand or as a separate category for heavy unbalanced loads. A few simple techniques are available for balancing that require fast computing and real-time modeling.[148]

See also

References
  1. Weron, Rafał (2014). "Electricity price forecasting: A review of the state-of-the-art with a look into the future". International Journal of Forecasting. 30 (4): 1030–1081. doi:10.1016/j.ijforecast.2014.08.008.
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