The power of pricing: Free electricity nights and weekends

Grand Coulee Dam at night

As a follow up to a previous post about pricing and electricity, I found this article that mentions several utilities offering free electricity on nights and weekends.

Yes, you read that right–free electricity on nights and weekends.

Price is a powerful signal and motivator. And free is a great price. But how can utilities do this, and why?

The power grid is built to handle the large energy demands of our workday and workweek lives. It’s part of our nature as diurnal social creatures who have decided that many people can and should work five, eight-hour shifts with two days off per week. We may turn off our factories nights and weekends, but the grid is still there, a large fixed cost.

It’s akin to the phone network. We built it to handle the volume of calls during weekdays; night and weekends that capacity remains even after we’ve left the office. Hence, phone companies started offering free nights and weekends to encourage use of their expensive fixed asset.

In addition, much of our power is baseload generation. It’s the type of power generation that can and does run around the clock to meet the continuous, minimum requirements for energy. Nuclear, coal, and hydroelectric power are examples of baseload generation. Because these plants are always running, another large fixed asset, and because energy can’t be stored in large amounts, there’s often plenty of cheap power during nights and weekends.

(Much of baseload generation today is also environmentally hazardous, so it makes sense to use it most efficiently. Common renewal energy sources like solar and wind are not constant–the sun goes down and the wind stops and starts. Other renewal energy sources, such as ocean thermal conversion, can be constant, but are experimental at this stage.)

Utilities are starting to use price signals, like free power, to encourage consumers to change their behavior. If utilities can switch consumption from weekday to nights and weekends, they can save cost and make better use of their existing assets.

Waiting until evenings and weekends to run your dishwasher and clothes dryer might not seem like a big deal. In truth, your personal savings will be relatively small unless and until utilities significantly raise the price on costly weekday power. But in the long run, there are big savings in not building more peak energy generation capacity just so that you and I can wash our dishes and drive our clothes at 3 pm on Thursday

One thought on “The power of pricing: Free electricity nights and weekends

Leave a Reply

Your email address will not be published. Required fields are marked *