NYC has it now, but I think as generation/fuel prices rise (in the long-term) and utilities get slightly more sophisticated, we're going to see more on-demand pricing as utilities seek to apply the same price changes they pay generators for peak-demand supply to consumers.
In a situation where many people were doing load shifting, I think this could even benefit those who aren't doing load shifting themselves (by reducing peak demand across the network).
For each person that load-shifts, it slightly reduces the payoff for the next person to load-shift.
In the UK, the peak demand is already in the evening[1], because solar has eaten the cheap lunch during the day (which it was supposed to do, but it means that each additional solar panel is going to have a harder job paying for itself). And the demand difference between low and high is about 30GW to 40GW.
Great point about marginal benefits of load shifting. I do think we're so far from that reduction being significant at this point that it's worth attempting.
I believe peak demand in most non-industrial areas is already evening, because residential areas tend to have less efficient energy use than commercial spaces due to density, and everyone is home at the same time, often doing energy intensive tasks such as cooking, using the A/C, opening the fridge. I heard from someone at a power company that advertisements during the Super Bowl are a major issue, because everyone opens their fridge and flushes the toilet at the same time, and power supply has to spike for 3 minutes and then return to normal.
I think we're instead going to see more direct load-shifting agreements with end-users, not on-demand pricing. For example in Texas it's now common for utilities to give you a discount on your electric rates if you sign up for a program where you install a smart thermostat, and agree to let them slightly reduce your A/C power usage when the grid is nearing peak capacity. This lets them do exactly the peak load-shedding they want, controlled directly by the system operators, rather than having to design a system of price incentives, educate users about them, and hope the incentives produce the desired outcome.
In my experience, at least in the midwest USA, electric companies give you a choice between a flat rate or "time of use" pricing. You can pick whichever you prefer, and switch between them if you want to try a different one.
"Time of use" charges more for kWh use during peak hours and less during off-peak. Depending on your usage patterns it can be cheaper to do time of use pricing.
One point is that if batteries in houses (or electric cars) become more common, there's more incentive for a utility to offer variable pricing, because more people can actually make use of it, letting the utility company get by with less peak capacity.
I agree in the long term (50 years) that is true, but in the medium term (15 years) solar + storage might be moving faster than utility companies want. If you built a power plant with a 40 year lifespan in the year 2000, you would not be happy if peak demand is lower than expected in 2025.
I would not expect the utility companies to be allies in this transition period to clean energy. It requires major capital outlays from them, it invalidates previous investments that have not fully depreciated, and in the end they will probably make less money.
This is not to throw a wet blanket on solar and storage, I just think we need to be cognizant of the idea that in all likelihood utility companies are both required to change for this whole thing to work and will be very resistant to that change. There might need to be changes to incentives or regulation to get the utility companies moving in the right direction faster.
Electric utilities require capital investment proportional to peak usage, but only earn returns on average usage. This will only increase the ROIC of an electric utility by reducing the peak:average ratio.
Additionally, electric utilities are in a constant cycle of capacity upgrades to keep up with increasing demand. Customers adding distributed storage allows utilities to delay capital investment (which makes the company look better in the near-term).
I think they're saying that the investment in peak capacity may be already made, whereas the returns on use are ongoing, so creating incentives to save electricity may not be valuable to the companies.
Don't know if that's their actual cost-structure, but it's plausible in the abstract.
Pretty sure my rate is the same all the time. I wonder what percentage of electricity customers have variable rate pricing.