Why Time-of-Use Tariffs Don’t Work - and What Will

The grid needs less spiky power demand. Consumers want affordable energy. Time-of-Use (ToU) tariffs, with peak/off-peak pricing and hourly wholesale/dynamic prices, are a blunt force instrument built for a simpler grid, not tomorrow’s distributed and renewable-heavy power system.

Why ToU Fails

• Rebound effects create new peaks. Turn off a heat pump or EV charger during a peak price window, and it will “catch up” later. Thermostats overshoot, chargers draw harder, batteries refill fast. Studies from NREL and others show this creates secondary peaks¹, shifting rather than solving the problem.
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• ToU only works with automation, which most homes lack. Without automated controls, ToU is just a suggestion. Research² shows that typical households have concerns about effort, complexity, and lack of control, limiting adoption. Activating flexibility with ToU requires automation and algorithms that always respect comfort constraints: “Charge my EV by 8 a.m.” or “Keep my home below 75° F / 24°C” or industrial constraints (“No impact on factory output or quality”).

• Prices often don’t reflect the full grid reality, and if they do, it’s too complex. Even hourly wholesale or nodal prices capture only part of the grid state: supply, demand, and some congestion. They typically miss distribution-level congestion, voltage limits, risk-driven operator actions, and more complex grid constraints. And if you make the prices more and more complex, you get another problem: consumers prefer predictability and simplicity of energy bills too much to adopt this at scale.  

Bottom line: ToU is too simple for the grid, and when it's not, it's too complex for the customer.

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What Actually Works: Orchestrated Flexibility + Simple Propositions

• Real-time orchestration of flexible assets. A modern grid needs a coordination layer that integrates real-time markets and congestion signals, renewable forecasts, user comfort constraints, multi-day optimization horizons, rooftop solar, and local load patterns. This unlocks genuine “inherent flexibility”: smartly shifting to optimize the full (future) grid state while never compromising individual comfort or industrial output.

• Simple incentives for consumers. Instead of complex tariffs, offer predictable discounts (e.g., “10% off all kWh”) in return for automated, non-intrusive control of flexible devices. Customers get stability; utilities get real-time, dispatchable flexibility they can integrate into trading, congestion management, and reliability operations. This indeed puts the onus for risk management on the trading and grid ops side. But this capability should be these teams’ raison d’être.

• This is what Beebop enables. Beebop embeds B2B and B2C flexibility directly into trading and grid operations, providing real-time response for the grid and simple, stable costs for consumers. That’s how we unlock an energy system that’s affordable, reliable, and renewable-ready without forcing families and SMEs to become energy traders.

Bottom line: Time-of-use pricing assumes customers are willing and able to act as mini-grid operators; monitoring prices, configuring the right HEMs, and responding consistently across the power system. In practice, that’s like posting speed limits and hoping traffic manages itself. Orchestration takes a different approach: it delegates automated control to an expert layer that coordinates assets in real time, resolves conflicts, and delivers secure and reliable system-level cost reduction, without the clutter.

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¹ E.g. Thermostat Control for Load Shedding in Large Offices, Jie Xiong and Janghyun Kim, NREL/TP-5500-89340

² E.g. The peak load effects of demand response with simple time-of-use pricing, https://www.sciencedirect.com/science/article/pii/S23524677250036teams’This indeed puts37

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