Assessing the effectiveness of time-of-use pricing design: Provincial evidence from China
With the expansion of renewable energy and evolving electricity consumption patterns, time-of-use (TOU) pricing has become a crucial mechanism for cost transmission and demand-side management. However, the effectiveness of TOU pricing in accurately reflecting system costs across different industries...
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| Main Authors: | , , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2025-07-01
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| Series: | Energy Strategy Reviews |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2211467X25001439 |
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| Summary: | With the expansion of renewable energy and evolving electricity consumption patterns, time-of-use (TOU) pricing has become a crucial mechanism for cost transmission and demand-side management. However, the effectiveness of TOU pricing in accurately reflecting system costs across different industries remains unclear. This study constructs a system cost estimation model to evaluate how TOU pricing influences cost pass-through efficiency and user electricity consumption behavior. Empirical analysis using provincial actual data before and after TOU pricing adjustments reveals that the revised TOU scheme significantly improves cost transmission. Sectors such as public services and commercial users demonstrate more pronounced peak-valley load patterns and stronger alignment with price signals, indicating relatively higher electricity consumption flexibility. The new pricing mechanism enhances the correlation between electricity prices and load curves, reducing the discrepancy (F-value) by 14.2 % on average across all industries, with the industrial and financial sectors showing the highest sensitivity to price changes. The study also finds that TOU pricing leads to a re-distribution of electricity costs, with the industrial and financial sectors experiencing a 19.74 % and 41.56 % reduction in total electricity expenditures, respectively, while the transportation sector sees a 13.82 % increase due to electric vehicle charging behaviors. Seasonal differences in TOU effectiveness are also observed, with the most significant cost pass-through improvements occurring in autumn and winter, where industry demand responsiveness is highest. These findings validate the role of TOU pricing in improving cost transmission efficiency and highlight the need for sector-specific adjustments to optimize economic outcomes. |
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| ISSN: | 2211-467X |