Dynamic pricing exploration in the US Market

LCP Delta provided strategic insights into the dynamic pricing landscape in the US energy market, focusing on the residential sector in California, Texas and New York to guide client’s potential service offering in Japan.

Client background

A major Japanese technology conglomerate, is seeking to expand its energy portfolio with a focus on introducing dynamic electricity tariffs in Japan. To this end, the client wanted to learn from the US market, where dynamic pricing strategies are getting / have already been deployed in various states.

What the client needed and their key question(s)

The client required a detailed understanding of the current state of dynamic pricing across the US, with a focus on successful strategies that could be adapted to the Japanese market. Their key questions were:

• How do dynamic tariffs like Time of Use (ToU) and Real-Time Pricing (RTP) function in the US?
• What have been the key drivers of success and challenges faced by US energy providers?
• How can our client leverage these learnings to introduce similar dynamic tariffs in Japan?

Our solution

We conducted a comprehensive market study covering 24 states, with a specific focus on California, Texas, and New York evaluating key market drivers, regulatory support and technological requirements for the successful implementation of dynamic pricing models.

This was done using our existing expertise on dynamic tariffs across major markets and through stakeholder interviews to fill any information gaps for the US.

We also analysed pilot projects in these states, to highlight successful approaches to load-shifting and consumer engagement. Our recommendations included tailored strategies for the client to develop partnerships with smart grid and home automation providers to replicate success seen in the US to Japan.

Our impact

The report delivered key insights into the regulatory and market conditions required for the successful introduction of dynamic pricing. The client is now equipped with a detailed understanding of market dynamics and regulatory frameworks to guide its strategy for introducing innovative tariff structures in Japan. Our recommendations are set to shape client’s approach to developing pilot projects, ensuring a smooth market entry and promoting consumer adoption of dynamic tariffs in the Japanese energy market.