Leverage dynamic electricity rates to boost your revenue and slash costs for EV drivers

The rising significance of dynamic electricity prices and why you should take notice

Imagine if electricity prices were not fixed but fluctuated based on real-time market conditions. This is the concept behind dynamic electricity prices. Currently, consumers and EV drivers pay a fixed rate for their electricity, regardless of whether wholesale prices rise or fall. This lack of flexibility means we end up paying more when prices drop, and we are not incentivized to use electricity when it’s abundant, and prices are low. But it’s not just consumers who bear the brunt of this inflexibility. For charge point operators (CPOs), sticking to fixed prices can result in running charging stations at a loss during price spikes.

The solution lies in leveraging dynamic electricity prices, where the cost would shift in sync with real-time market dynamics, offering a flexible and responsive approach to pricing. Rather than being locked into a fixed rate, dynamic pricing allows EV charging operators to adjust prices based on the market conditions creating a win-win situation for both CPOs and EV drivers.

Types of dynamic pricing

Static time-of-use tariffs – Prices vary based on predetermined time slots, such as day, night, weekdays, or weekends, allowing customers to anticipate and adjust their usage accordingly.

Critical peak tariffs – Prices remain mostly stable but can increase during periods of high demand, accompanied by a fixed surcharge. Customers receive advance notice to encourage load shifting away from these peak times.

Real-time tariffs – Prices mirror the current wholesale rates and are determined a day in advance, enabling customers to respond to market fluctuations and potentially save on electricity costs.

Why CPOs should embrace dynamic electricity rates

Compliance with regulations and programs:

Implementing dynamic electricity rates is not just a trend; it is driven by ongoing regulations and programs that incentivize energy utilities to provide these rates to their customers. It has been particularly successful in mature markets like the UK, where companies like Octopus have embraced dynamic pricing and witnessed positive results. 

Active participation in energy management: 

The evolving home energy market emphasizes consumer flexibility and control. By incorporating dynamic pricing, CPOs empower EV drivers to actively manage their energy consumption and contribute to grid stability.

Market differentiation and revenue growth: 

With the potential for rates to change every hour, half an hour, or even every 15 minutes, CPOs can harness smart charging point management software to bring unprecedented flexibility to their pricing structures. This differentiation enhances customer satisfaction and leads to increased revenue opportunities.

Customize electricity rates to power your EV charging strategy

AMPECO’s platform allows you to set electricity rates that align with your business strategy and cater to the unique needs of your EV drivers. When setting an electricity rate, AMPECO allows for two options:

1. You can create a custom electricity rate within the AMPECO backend, tailoring it to your specific requirements.

2. You can access day-ahead electricity rates from reputable sources like Nord Pool or Octopus.

You can create Energy Time-of-Use (ToU) custom charging tariffs based on the electricity rates you have created or fetched dynamically. These rates can be the same for every day of the week or vary daily. You can establish special prices for holidays, promotional events, or any occasion where prices should differ from your standard rates, enhancing your promotional strategies. These electricity rates can be applied to specific charge points, user groups, or partners for certain days or periods.

To provide you with even greater control and profitability, AMPECO allows you to add a markup on top of your electricity rates. You can specify this markup as a percentage per kilowatt-hour (kWh), a fixed fee per kWh, or opt for a more flexible markup with different prices for different time slots throughout the day. 

Unlock flexibility and precision in your charging tariffs

Create a custom electricity rate within AMPECO’s backend

This option allows you to create a custom electricity rate within AMPECO’s intuitive backend. You can tailor your rates and set the same pricing for every day of the week or assign a different price for each day. Define the pricing granularity, choosing between 15-minute, 30-minute, or 1-hour intervals, and assign a specific price for each time slot. A default price can be established if a custom price is not set for a slot. CPOs can also set special day pricing, enabling them to select specific days of the year when pricing differs, following the same pricing granularity. These custom electricity rates can be applied to specific charge points, allowing the system to track the electricity cost for each charging session accurately.

Create an EV charging tariff based on day-ahead electricity rates from Nord Pool or Octopus

This option two lets you fetch day-ahead electricity rates from industry leaders like Nord Pool or Octopus. CPOs can enable the integration in the backend and select the desired country to receive prices from. Nordpool covers many European countries, including Denmark, Sweden, Norway, Finland, Lithuania, Latvia, Estonia, Germany, Poland, France, The Netherlands, Belgium, Austria, and Luxembourg.

All day-ahead prices from Nord Pool are updated in real-time, ensuring accurate calculations. It’s important to note that wholesale electricity prices can be volatile, especially in markets with fluctuating demand and supply. To mitigate this, AMPECO recommends putting a markup on the wholesale prices to buffer against price fluctuations, providing customers with a more stable and predictable tariff. 

Octopus Energy in the UK allows for two smart tariffs: off-peak and dynamic. We offer integrations with both types and charge point operators can enable them simultaneously so that drivers can choose either option when charging.

Set up Energy ToU charging tariffs to apply dynamic electricity rates

CPOs can establish Energy Time-of-Use (ToU) charging tariffs in our backend to utilize the dynamic rates effectively. You will notice two options. Option 1 allows you to use the electricity rate assigned to the charge point as the base for the tariff. In cases where no electricity rate is assigned, the second option comes into play. Option 2 enables CPOs to choose a fallback electricity rate from a dropdown menu containing all available rates in the system, which will be used to determine the final price for the customer.

Set markups on top of the selected electricity rates

CPOs can set markups on top of the chosen electricity rates. These markups can be defined as a percentage per kilowatt-hour (kWh), a fixed fee per kWh, or a flexible fee per kWh, allowing different markups to be set for different time slots throughout the day. You can fine-tune the granularity of the time intervals to suit your preferences with options such as 15-minute, 30-minute, or 1-hour intervals.

Set additional parameters

To further customize charging tariffs, connection fees or minimum prices per session can also be established. In addition, CPOs can set various parameters, specifying which users, user groups, subscription plans, or ad-hoc users the tariff applies to. Start and end dates can be set to determine the validity period of the tariff. Additional parameters like maximum duration and maximum energy can be defined to control session limits, ensuring optimal charging experiences for EV drivers.

The benefits that CPOs gain by using dynamic electricity rates in their EV charging tariffs

Flexibility in pricing strategy: Setting charging prices based on your preferred or actual electricity rates allows you to align your pricing strategy with market conditions and optimize revenue generation.

Control over earnings: By incorporating a predefined profit margin on top of the electricity rates, you can control your earnings and ensure a steady and sustainable income stream.

Safeguard against operating losses: Establishing a minimum price for your charge points safeguards against potential operating losses in the face of significant market fluctuations.

Instill customer confidence and trust. Adopting dynamic electricity rates fosters transparency in your customer relationships, as both parties know that costs are adjusted to reflect the broader market, ensuring a fair and equitable transaction for all involved.

Why EV drivers will love your dynamic electricity rates

Greater choice and flexibility: With dynamic electricity rates, drivers can opt to charge when they know the price will be lower.  

Smart charging that saves money: Thanks to smart charging with dynamic rates, drivers can always be sure that their car will be charged cost-efficiently and in the expected time.

Better for the environment: By choosing to charge off-peak hours or when the prices are lowest, EV drivers contribute to reducing the demand for additional power generation.

Conclusion

Dynamic pricing allows for flexibility, responsiveness to market conditions, compliance with regulations, and increased revenue opportunities for charge point operators. It empowers EV drivers to actively manage their energy consumption, save on costs, and contribute to grid stability. By aligning pricing strategies with real-time market dynamics, CPOs can enhance customer satisfaction, instill trust, and create a fair and equitable transaction environment.