Evaluating Cost and Risk Trade-Offs in Electricity Retail Contracts for Residential Consumers

Abstract

This thesis undertakes a rigorous evaluation of residential electricity contract structures, examining the trade-offs between economic efficiency and exposure to market-induced cost volatility in the context of a liberalized energy market. Employing a high-resolution simulation framework, the study analyses eleven real-world Belgian electricity contracts alongside a controlled extension comprising fictive contracts of identical pricing logic but varying temporal granularity. The analysis is applied across seven representative household profiles, differentiated by technological configurations—including photovoltaic systems, battery storage, heat pumps, and electric vehicles—and subjected to four distinct market scenarios: Normal, Stable, Extreme, and Crisis.

The empirical findings demonstrate that no single tariff structure dominates across all contexts. Rather, contract performance is intrinsically profile-contingent. Fixed tariffs offer complete price stability but entail systematically higher expenditures, particularly disadvantaging passive consumers. Hybrid and variable tariffs, notably Groene Burgerstroom and Goedkope Stroom, perform optimally under stable conditions, particularly for prosumer households. By contrast, fully dynamic contracts—such as Engie Dynamic—prove advantageous only under volatile market conditions and for technologically equipped households capable of capitalizing on price arbitrage opportunities.

The fictive contract extension isolates the effect of tariff granularity, revealing that increasing temporal resolution (from fixed to dynamic pricing) invariably heightens cost volatility without yielding commensurate savings in the absence of demand-side flexibility. These results underscore the conditional efficiency of granular pricing structures and the critical role of household adaptability.

Methodologically, the study contributes a scalable, modular simulation tool capable of integrating granular consumption profiles, contract architectures, and market dynamics. The broader implication is clear: electricity contract evaluation must transcend static cost comparisons to incorporate volatility metrics, technological readiness, and behavioral elasticity. The findings hold significant relevance for both consumers and policymakers in designing equitable, resilient, and economically rational electricity contracting frameworks.