A home using energy storage to manage electricity costs.

Smart Energy Storage: Can You Save Money with Power-Based Tariffs?

Kai Mendoza in Climate & Environment August 2025 • 3 min read.

"Unlocking household energy savings with batteries and intelligent tariff management."

Imagine a world where you could store electricity when it’s cheap and use it when it’s expensive. Electrical energy storage is making this a reality, offering homeowners more control over their energy consumption and costs. But how can you maximize these benefits, especially with emerging power-based distribution tariffs (PBDTs)?

Distribution System Operators (DSOs) are exploring power-based distribution tariffs (PBDTs) for small customers. These tariffs aim to address the current challenges in energy distribution, but their effectiveness depends on how well homeowners can adapt. Energy storage can play a vital role, helping to decrease peak power demands and potentially leading to significant cost savings.

This article will explore how electrical energy storage, combined with different pricing structures, can affect household energy costs. We'll break down the key findings of a recent study, revealing how smart energy management can make a difference to your wallet.

What are Power-Based Distribution Tariffs (PBDTs)?

A home using energy storage to manage electricity costs.

Traditional electricity tariffs often don't reflect the true costs of delivering power during peak demand times. PBDTs are designed to change this by incentivizing customers to reduce their peak power consumption. Think of it as a way to encourage everyone to use less electricity during the busiest times of the day.

With smart meters becoming increasingly common, PBDTs are now more feasible for smaller customers. These tariffs typically include a few key components:

Basic Charge: A fixed monthly fee.
Volumetric Charge: The cost per kilowatt-hour (kWh) of electricity you use.
Power Charge: A charge based on your highest hourly average maximum power (HMP) during the month.

The goal of PBDTs is to motivate customers to lower their HMP, which can help reduce strain on the power grid and potentially lower overall electricity costs. Energy storage systems play a key role in helping customers achieve this.

Is Energy Storage Right for You?

While the potential for savings with energy storage and PBDTs is promising, it's crucial to consider your individual energy consumption patterns and local tariff structures. By understanding your peak power demands and exploring available incentives, you can determine whether investing in energy storage is a smart financial decision for your home.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1109/tpwrs.2018.2879612, Alternate LINK

Title: Utilization Of Electrical Energy Storage With Power-Based Distribution Tariffs In Households

Subject: Electrical and Electronic Engineering

Journal: IEEE Transactions on Power Systems

Publisher: Institute of Electrical and Electronics Engineers (IEEE)

Authors: Juha Koskela, Kimmo Lummi, Antti Mutanen, Antti Rautiainen, Pertti Jarventausta

Published: 2019-05-01

Everything You Need To Know

What are the main components of Power-Based Distribution Tariffs (PBDTs)?

Power-Based Distribution Tariffs (PBDTs) consist of three primary components: a Basic Charge, a Volumetric Charge, and a Power Charge. The Basic Charge is a fixed monthly fee. The Volumetric Charge is the cost per kilowatt-hour (kWh) of electricity consumed. The Power Charge is based on your highest hourly average maximum power (HMP) during the month. These components collectively aim to incentivize users to manage their energy consumption to lower the peak power demands.

How can Electrical energy storage help me with Power-Based Distribution Tariffs (PBDTs)?

Electrical energy storage can significantly benefit homeowners under Power-Based Distribution Tariffs (PBDTs). By storing electricity during off-peak hours when prices are lower, and using it during peak demand times, you can reduce your peak power consumption. This, in turn, can lower your Power Charge, a key component of PBDTs. The ability to manage your energy use with energy storage systems allows you to decrease your highest hourly average maximum power (HMP), potentially leading to significant cost savings and a reduced strain on the power grid.

What are the potential advantages of using Electrical energy storage with Power-Based Distribution Tariffs (PBDTs) for a homeowner?

Using Electrical energy storage with Power-Based Distribution Tariffs (PBDTs) offers several advantages for homeowners. Firstly, it provides greater control over energy costs by allowing you to strategically use stored energy during high-cost periods. Secondly, it can decrease your peak power demand, which directly impacts the Power Charge component of PBDTs. This can lead to lower overall electricity bills. Furthermore, it promotes energy independence and reduces reliance on the grid during peak times, which contributes to a more stable and sustainable energy system. Additionally, homeowners may benefit from incentives offered for reducing peak demand.

What is the role of smart meters in the implementation of Power-Based Distribution Tariffs (PBDTs)?

Smart meters play a crucial role in the implementation of Power-Based Distribution Tariffs (PBDTs). They provide the necessary infrastructure to monitor and measure electricity consumption at the level of detail required by PBDTs. These meters track energy usage, including the highest hourly average maximum power (HMP), which is essential for calculating the Power Charge. With the increasing prevalence of smart meters, it has become more feasible for Distribution System Operators (DSOs) to implement and manage PBDTs for a wider range of customers, including smaller residential users, thereby enabling more accurate and fair billing based on actual energy usage and peak demand.

How can I determine if investing in Electrical energy storage is a smart financial decision, considering Power-Based Distribution Tariffs (PBDTs)?

Determining if Electrical energy storage is a smart financial decision under Power-Based Distribution Tariffs (PBDTs) requires a careful assessment of your individual energy consumption patterns and local tariff structures. Start by analyzing your current electricity bills to understand your peak power demands and the existing pricing structure. Then, evaluate how PBDTs, with their Basic, Volumetric, and Power Charges, would impact your costs. Consider the potential savings from reducing your highest hourly average maximum power (HMP) through energy storage. Research any available incentives or rebates for energy storage systems in your area. Compare the upfront costs of the energy storage system with the projected savings over time, taking into account the expected lifespan of the equipment. Consulting with an energy expert can also provide personalized recommendations based on your specific circumstances.