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Time-of-Day (ToD) tariff


Source: BS

 Context: The article discusses India’s new electricity pricing system, Time-of-Day (ToD) tariff, which adjusts prices based on demand, aiming to reduce consumption during peak hours


What is Time-of-Day (ToD) tariff?

Time-of-Day (ToD) tariff is an electricity pricing system that adjusts prices based on demand, with higher rates during peak hours and lower rates during off-peak hours. The goal is to encourage consumers to use electricity when demand is lower, helping to manage energy consumption and grid load.

 Status: This system is being introduced in India in 2024 for commercial and industrial users and in 2025 for other users. ToD tariffs are already used in many countries, including the US, UK, and Japan. For this system to work, smart meters are needed to track electricity use every 15 minutes.


Limitations of the system:

  • Increased Complexity: Billing becomes more intricate as users must monitor usage across different times.
  • Behavioural Changes Needed: Consumers must adapt routines, like altering vehicle charging or appliance use.
  • Higher Costs at Peaks: Inflexible users face elevated costs during high-demand hours.
  • Dependence on Smart Meters: Success relies on ample smart meter deployment; India aims for 250M by 2026.
  • Possible Resistance: Some users might not adjust their consumption habits.
  • Storage Challenges: Renewable energy’s storage limitations can hinder constant supply, despite ToD incentives.