At exnaton CONFERENCE 2025, one topic threaded through nearly every conversation: dynamic tariffs and flexibility mechanisms are rapidly evolving from experimental products into foundational elements of the future energy system. This transformation is being driven by Europe's accelerating renewable energy adoption, increasing grid strain, and the rise of flexible electrical loads such as electric vehicles (EVs) and heat pumps
In his keynote, Fabian Stocker, Head of Key Account Management at exnaton, provided a comprehensive overview of why dynamic tariffs matter now more than ever, how adoption differs across Europe, and what utilities must understand to navigate the next five years. This article distills the central insights from his talk – combining market observations, technological realities, and strategic implications for utilities across Europe.
Europe's renewable energy transition has accelerated dramatically in recent years, marking a fundamental shift in how electricity is generated across the continent. Denmark now operates on more than 80% renewable electricity, positioning itself as a global leader in clean energy. Germany has passed the 60% renewable energy threshold, while according to energy think tank Ember, Europe produced more electricity from renewables than from coal for the first time in 2024. This represents a major milestone for climate action and long-term energy resilience.
Renewable energy comes from sources that naturally replenish, including solar panels, wind turbines, hydroelectric dams, and biomass. Unlike fossil fuels, these sources produce minimal carbon emissions and don't deplete over time.
However, this remarkable progress comes with significant system-level pressures that energy grid operators must address. Wind and solar generation tend to peak simultaneously – often during midday hours when the sun is brightest and winds are strongest – frequently exceeding actual electricity demand. As a result, countries like Germany and the United Kingdom are incurring record-high curtailment costs, now measured in billions of euros annually.
Curtailment occurs when renewable energy generators are forced to reduce or shut down their output because the grid cannot absorb all the electricity being produced. This represents both wasted clean energy and lost revenue for renewable energy producers.
Market prices increasingly drop into negative territory during periods of excess renewable generation, creating instability for renewable producers who suddenly face the paradox of being "victims of their own success." Negative electricity prices mean producers must actually pay to place their electricity on the grid – a counterintuitive situation that highlights the urgent need for better demand-side flexibility.
This is the critical moment where flexibility mechanisms become indispensable. Whether through grid expansion projects, battery energy storage systems, or dynamic electricity tariffs, system operators need new instruments that can shift consumption toward periods of high renewable availability. Among these tools, dynamic tariffs stand out as the mechanism most accessible to end consumers and therefore the most scalable solution for demand-side management.
The past five years have witnessed dynamic tariffs move from niche pilot projects to mainstream market offerings across multiple European countries. Several factors have converged to accelerate this transition:
1. Consumer readiness and acceptance: Consumers have become far more comfortable with dynamic pricing models, particularly EV drivers and heat pump owners who have both the technical flexibility and financial motivation to optimize their electricity consumption patterns. These early adopters recognize that shifting consumption to off-peak hours can result in significant cost savings – sometimes 30-50% compared to standard flat-rate tariffs.
2. Market disruption by neo-utilities: A new generation of energy suppliers, often referred to as "neo-utilities" or "challenger utilities," has used dynamic tariffs to strategically differentiate themselves from traditional market incumbents. These agile companies leverage digital technologies and customer-centric design to create compelling value propositions.
3. Successful commercial validation: Octopus Energy serves as the most visible example of dynamic tariff success. With more than seven million customers in the UK and over one million recently gained in Germany, they have demonstrated that dynamic pricing is not only technically viable but commercially attractive at scale. The company's Agile Octopus tariff, which tracks wholesale electricity prices in half-hourly intervals, has become one of the UK's fastest-growing energy products.
4. Regulatory support: Similar momentum is taking place in markets like Switzerland, where utilities such as Group E, EKZ, and Primeo have announced dynamic tariff launches for 2026, supported by evolving regulatory frameworks that encourage time-variable pricing.
Dynamic tariffs resonate with consumers because they align customer behavior with system needs through transparent, real-time pricing. Unlike traditional flat-rate electricity tariffs where customers pay the same price per kilowatt-hour regardless of when they consume, dynamic tariffs vary prices based on wholesale market conditions, grid capacity, and renewable energy availability.
Example scenario: On a sunny, windy afternoon when renewable generation is abundant, electricity prices might drop to 5 cents per kWh or even turn negative. That same evening, when millions of households turn on appliances simultaneously while solar generation disappears, prices might spike to 30-40 cents per kWh. Dynamic tariffs pass these price signals directly to consumers, creating strong economic incentives to shift flexible loads to optimal times.
As electrification accelerates – especially through electric vehicle adoption – customers increasingly understand that when they charge matters just as much as how much they charge.
At typical European home electricity prices of €0.20–€0.30/kWh, fully charging a 60 kWh EV battery costs roughly €12–€18, while dynamic or off‑peak tariffs can reduce this significantly when prices drop at night. (How to Estimate EV Charging Cost per Mile in Europe – A Practical Guide)
Early adopters appreciate these substantial savings, while utilities benefit from reduced peak loads, improved renewable integration, and more efficient use of grid infrastructure. This creates a win-win scenario that drives adoption on both sides of the meter.
The well-known "duck curve" illustrates one of the most significant challenges facing modern electricity grids: the widening gap between midday renewable generation and evening peak consumption. First identified by the California Independent System Operator, this graph shows how net electricity demand (total demand minus renewable generation) creates a distinctive duck-shaped curve when plotted throughout the day.
Key characteristics of the duck curve:
Germany now experiences more than 500 hours of negative electricity prices per year – hours when renewable generation so far exceeds demand that prices turn negative. Spain surpasses this figure by a wide margin, reaching over 600 hours annually. This is not merely a pricing anomaly but a structural consequence of high renewable penetration without sufficient demand flexibility.
Germany recorded 457 hours of negative wholesale electricity prices in 2024, up from 301 hours in 2023, reflecting rising renewable generation and limited system flexibility. In Spain, negative‑price hours surged from zero in 2023 to at least 244 hours in 2024 and more than 500 in 2025, as rapid solar and wind growth outpaced the deployment of flexibility resources.
Analysts emphasize that these negative prices are not a temporary anomaly but a structural outcome of high renewable penetration without sufficient demand‑side flexibility, storage, or grid reinforcements.
Fabian Stocker noted that flexibility mechanisms are the primary lever that prevents the duck's belly from getting even larger. Dynamic tariffs allow customers to shift their consumption to moments when there is abundant renewable electricity, naturally easing pressure on the grid infrastructure. In essence, dynamic tariffs translate the volatility of renewables into actionable price signals that connected devices can respond to automatically.
Traditional approaches to managing electricity grids assumed relatively predictable generation from dispatchable power plants (coal, gas, nuclear) that could be ramped up or down to match demand fluctuations. This paradigm is increasingly obsolete in a renewable-dominated system where generation is weather-dependent and less controllable. The solution requires shifting focus from supply-side flexibility (adjusting generation) to demand-side flexibility (adjusting consumption) – and dynamic tariffs are the primary tool for achieving this shift at scale.
One of the most important insights from Fabian's presentation is that dynamic tariffs are not a single standardized product, but rather a diverse category encompassing multiple pricing models. Utilities should not search for "the" perfect dynamic tariff; instead, they should expect – and prepare for – a portfolio of tariff models tailored to different customer types, consumption patterns, and flexibility capabilities.
Octopus Energy UK currently offers sixteen different dynamic tariff products, each designed for specific customer segments.
Scottish Power provides ten distinct dynamic tariff variants, while other European utilities are rapidly developing their own portfolios.
These models differ not only in pricing logic but also in the degree to which they integrate various cost components, incorporate risk buffers to protect consumers from extreme price volatility, or target specific customer groups with particular consumption flexibility.
In Germany, this diversity is already visible, albeit still at an early stage, mainly due to the limited rollout of smart meters. Besides the well-known §41a EnWG dynamic energy component, which allows utilities to pass through day-ahead wholesale prices, utilities are starting to introduce time‑of‑use grid fees under §14a EnWG, paving the way for hybrid tariffs that combine wholesale price variation with local grid congestion signals.
Grid fees (or network charges) are the costs customers pay for using the electricity distribution and transmission infrastructure. These fees typically account for 20-40% of a household electricity bill, depending on the distribution grid operator and the country. Making grid fees time-variable creates additional incentives for customers to avoid consumption during local grid congestion periods.
For many utilities, these hybrid models represent the first step toward more individualized, profile-based products that match customer behavior patterns, on-site renewable generation assets, and local grid capacity constraints.
Importantly, as dynamic tariff portfolios expand and premium, customers no longer buy a standardized commodity; they choose a product that reflects their lifestyle, devices, and flexibility preferences. This fundamental shift in mindset is reshaping the relationship between utilities and their customers from a transactional supplier-consumer dynamic to a more engaged partnership around energy optimization.
A critical misconception persists in discussions about dynamic tariffs: the idea that these pricing models require customers to constantly monitor electricity prices and manually adjust their behavior. As Fabian Stocker emphasized, behavioral demand response – where customers check prices and manually shift consumption – does not scale to mass-market adoption.
The reality of consumer behavior: It is unrealistic to expect customers to check electricity prices multiple times daily and adjust their routines accordingly. A small segment of highly engaged "prosumers" will do this enthusiastically – perhaps 2-5% of customers – but the mass market will not maintain this level of attention over the long term. Research shows that even initially engaged customers experience "engagement fatigue" after several months of manual optimization.
True flexibility at scale emerges only when dynamic price signals are fed directly into connected devices that can respond automatically. These include:
Home Energy Management Systems (HEMS): Central controllers that orchestrate multiple devices and applicances based on price signals, user preferences, and technical constraints. These systems can optimize entire household energy consumption patterns without requiring user intervention.
Smart EV chargers: Connected charging stations that automatically schedule charging sessions during low-price periods while ensuring the vehicle is ready when needed. Modern EV chargers can communicate with both the electricity tariff provider and the vehicle's battery management system.
Battery energy storage systems: Home batteries that charge when prices are low (or negative) and discharge when prices are high, maximizing economic value while supporting grid stability.
Smart heat pumps: Heating systems that can pre-heat homes during low-price periods and coast through high-price periods without compromising comfort – leveraging the thermal mass of buildings as implicit storage.
This automation-first approach is already standard practice in Nordic countries like Norway, Sweden, and Finland, where dynamic tariffs have been common for over a decade. In these markets, the connection between dynamic prices and automated devices is simply expected – customers wouldn't consider a dynamic tariff without the automation infrastructure to support it.
The same automation‑first approach is increasingly possible in markets like Germany, Austria, and Switzerland, supported by the gradual rollout of smart meters (mandated across the EU and in Switzerland) and the growing adoption of interoperable device standards such as EEBUS and OpenADR.
“Norway shows that high electrification and high renewables are not a contradiction: they produce fossil fuels, sell them to other markets, and make money, yet their own system runs on almost 100% clean power and almost all new cars are electric. The rest of Europe should simply look north for inspiration instead of losing its way in political confusion.” – Fabian Stocker
Dynamic tariffs therefore must be understood not primarily as a consumer interface but as a data interface. Their primary value lies in enabling automation and device optimization, not manual customer optimization. This conceptual shift is essential for utilities designing and marketing dynamic tariff products – the target audience is not just the customer but the customer's connected devices.
A key technical challenge for utilities implementing dynamic tariffs is that most Home Energy Management Systems today are primarily designed to optimize on-site self-consumption, with only a limited subset capable of processing wholesale day‑ahead prices such as the EPEX SPOT market curve. While this simplified approach may work adequately for early-stage pilot projects, it will not suffice as dynamic tariff models become more sophisticated and multi-layered.
Future tariffs will increasingly incorporate a combination of multiple cost components:
If a connected device receives only the wholesale price component, it sees only part of the economic truth. A customer may face very low wholesale energy prices during a particularly windy night but simultaneously experience very high time-variable grid fees because the local distribution network is constrained. Optimizing consumption based on this incomplete information leads to suboptimal economic outcomes for the customer and can even exacerbate local grid problems.
Real-world consequence: Imagine thousands of EVs in a neighborhood all starting to charge simultaneously because they received a low wholesale price signal, but without considering that the local transformer is already near capacity. This could trigger grid protection mechanisms, cause equipment damage, or result in higher grid fees for all customers in that area.
The solution is clear and technically achievable: Home Energy Management Systems, EV chargers, and other flexible devices must receive a unified, comprehensive price signal – one that reflects all relevant cost components for that specific customer at that specific location and time. Only then is truly intelligent optimization possible.
This requires utilities to implement sophisticated tariff engines capable of calculating personalized, real-time price signals that aggregate multiple data streams. Companies like exnaton provide the middleware infrastructure to make this possible, acting as a bridge between utility billing systems and customer devices.
During the conference, Fabian showcased a compelling live demonstration illustrating how exnaton enables automated flexibility in real-world conditions. The demonstration connected actual devices to real dynamic tariff data, showing the seamless integration that makes automation practical.
A Home Energy Management System was connected directly to exnaton's , giving it access to the complete dynamic price signal of a specific customer profile. This connection took seconds rather than minutes, demonstrating the plug-and-play nature of modern integration standards.
Once connected, the HEMS could autonomously shift consumption to lower-price periods without any manual intervention from the user. The system demonstrated:
The demonstration extended to electric vehicles, showing even more practical applications. By connecting an EV via the car’s standard login credentials, the vehicle could receive the customer's specific dynamic tariff data and automatically schedule charging sessions to maximize cost efficiency.
The user experience: The EV owner simply plugs in the vehicle when arriving home and sets their required departure time and minimum range. The charging system handles everything else – automatically starting and stopping charging during the most economical periods while ensuring the vehicle is ready when needed.
This scenario illustrates what dynamic tariffs are ultimately designed to achieve: seamless automation that delivers tangible benefits to both the customer (through lower electricity costs) and the grid (through better renewable integration and reduced peak demand). At the same time, progress is often slowed by regulatory limitations and administrative bureaucracy, which can delay approvals, complicate tariff design, and create uncertainty for market participants. The technology exists today – the challenge is scaling deployment, ensuring interoperability across devices and utility systems, and navigating complex regulatory processes.
Fabian's insights point to a clear and urgent conclusion: dynamic tariffs and flexibility products will become integral to utility strategy within the next five years. These are no longer experimental ideas or nice-to-have features. They are system necessities driven by the fundamental physics and economics of renewable-dominated electricity grids.
Utilities that build the following capabilities will be best positioned to thrive in a renewable-dominated market:
1. Automated flexibility infrastructure: The software, device connections, and metering that automatically adjust electricity use in response to price or grid signals.
2. Real-time data integration: Bidirectional data flows with HEMS, EV chargers, smart meters, and other edge devices using industry-standard protocols.
3. Portfolio-based tariff design: The analytical and product development capabilities to create, manage, and optimize multiple tariff variants for different customer segments.
4. Customer education and engagement: Clear communication strategies that help customers understand the value proposition without overwhelming them with technical complexity.
5. Regulatory navigation: Active engagement with evolving regulations around dynamic pricing, grid fees, and data privacy across multiple European jurisdictions/.
Conversely, utilities that adopt a wait-and-see approach risk being overtaken by more agile competitors – often neo-utilities like Octopus Energy – who are already shaping customer expectations around what energy service should look like in the 2020s. The market is moving quickly, and customer switching costs are declining as digitalization makes comparison and switching easier.
First-mover advantages: Early adopters of dynamic tariffs gain valuable operational experience, build customer loyalty among the most desirable (flexible and engaged) customer segments, and establish their brands as innovation leaders rather than traditional commodity suppliers.
Dynamic tariffs offer powerful tools to integrate renewable energy efficiently, reduce costly curtailment of clean generation, support grid stability during the renewable transition, and deliver tangible economic value to customers who embrace flexibility. Their success, however, will depend critically on the ability of utilities to deliver holistic price signals, integrate seamlessly with home and mobility devices, and design tariff portfolios that reflect the diversity of customer needs and flexibility capabilities.
Several developments will shape the dynamic tariff landscape over the next 3-5 years:
Vehicle-to-Grid (V2G) integration: As bidirectional charging capabilities roll out in more EV models and pilots scale up, vehicles are expected to evolve from flexible loads into distributed storage assets that can discharge power back to the grid during high‑price or constraint periods
AI-powered optimization: Advances in AI‑based Home Energy Management and grid software will increasingly enable predictive, personalized optimization of consumption and storage, aligning comfort and convenience with dynamic price and grid signals
Peer-to-peer energy trading: Peer‑to‑peer energy trading is likely to remain niche but grow through regulatory sandboxes and energy community models, with dynamic tariffs and local flexibility prices providing reference signals for these markets
Integration with heat networks: Integration between electricity tariffs and district heating or ambient heat networks is expected to deepen, as coordinated control of heat pumps, thermal storage, and network operation becomes a key lever for flexibility and decarbonization
At exnaton, we support utilities with a technology platform, domain expertise, and market experience required to launch dynamic tariffs and flexibility products quickly and confidently. With deployments in more than 50 utilities across Europe and hands-on implementation experience in five different markets, we are ready to help utilities build the next generation of energy products that meet both regulatory requirements and customer expectations.
Our platform provides end-to-end support including:
The transition to renewable-dominated electricity systems is well underway across Europe, bringing both tremendous opportunities and significant operational challenges. Dynamic tariffs and automated flexibility mechanisms represent the most scalable, cost-effective solution to balance supply and demand in this new paradigm.
For utilities, the question is no longer whether to offer dynamic tariffs, but how quickly they can develop the capabilities to do so effectively. For customers, the value proposition is increasingly clear: lower electricity costs, better renewable integration, and a more resilient energy system.
The flexibility revolution is here. Forward-thinking utilities are already building the products, platforms, and partnerships to lead it.
Are you planning to introduce dynamic tariffs or flexibility products? Contact our team and learn how exnaton supports energy providers in developing and scaling new energy products.
