An analysis of the time of use electricity price in the residential sector of Bangladesh Md Moktadir Rahman a, * , Sujeewa Hettiwatte b , GM Shafiullah a , Ali Arefi a a School of Engineering and InformationTechnology, Murdoch University, WA 6150, Australia b School of Engineering, National School of Business Management (NSBM), Homagama, Sri Lanka article info Article history: Received 15 December 2016 Received in revised form 22 September 2017 Accepted 26 September 2017 Keywords: Time of use pricing Peak demand Inclining block pricing Low income economies Bangladesh abstract Time of Use (TOU) pricing is a cost-reflective electricity pricing scheme; it has proven to be an effective approach for reducing peak electricity demand in the residential sector around the world, especially in developed countries. The implementation of TOU pricing in low and lower-middle income economies is less appealing than in other settings. This is mainly because a traditional TOU pricing scheme may in- crease the cost of electricity for low income consumers. The lack of a suitable TOU pricing strategy for these countries results in high peak demand, poor utilization of network infrastructure and, conse- quently, higher electricity prices than necessary. The purpose of this study is to analyse and propose a TOU pricing scheme for the residential sector that will be suitable for countries with a high percentage of low income household consumers. In this study, Bangladesh will be used as an exemplar of a lower-to- middle income developing country. In Bangladesh, the residential sector is responsible for half the country's total electricity consumption, and constitutes an even greater proportion of the peak demand. Residential consumers currently pay inclining block usage rates that provide no financial incentive for them to shift their electricity usage from peak to non-peak periods. The proposed TOU pricing scheme is a combination of the traditional TOU and inclining block usage pricing schemes, based on a realistic load shifting capacity that is applicable to Bangladesh, and to other similar developing countries. Analysis of this pricing system for different income levels of residential consumers shows that the proposed scheme effectively reduces the peak demand, while ensuring minimum impact on consumer monthly energy bills and comfort levels. © 2017 Elsevier Ltd. All rights reserved. 1. Introduction The World Bank has categorized 31 and 52 countries in the World as low income and lower-middle income economies respectively [1]. As in many other low and lower-middle income economies, investments in Bangladesh utility sectors are growing slowly, and often not enough electricity production is available to serve the demand at all times of the year. The residential sector of Bangladesh has a relatively high electricity consumption and ac- counts for 52% of the total electricity retail sales according to the Bangladesh Power Development Board (BPDB) annual report of 2015 [2]. Distribution companies in Bangladesh have estimated that a significant proportion of the recent growth in peak demand has been due to increased demand in the residential sector. This is mainly due to the lack of awareness of peak demand, energy management options, and alternative pricing structures among households. The electricity demand in Bangladesh is growing at more than 500 MW a year [3] and is expected to double in the period from 1997 to 2020 [4]. The peak demand growth requires high investment in network capacity and peak generation re- sources. A study by Ref. [5] has predicted that Bangladesh will not be able to meet its future energy demand without importing en- ergy. This is due to inadequate oil and natural gas reserves, derated capacities of aging power plants, limited capacity of transmission or distribution networks and severe climate change effects [6]. The efficiency of energy production and consumption in Bangladesh is poor which has consistently strained the power system during peak demand periods [7]. Failure to match supply and demand has resulted in brownouts or blackouts. In such situations, utilities have had to import additional capacity (often at a high-cost premium) from neighbouring countries, switch to peak capacity generators, and apply load shedding schemes. * Corresponding author. E-mail address: Md.Rahman@murdoch.edu.au (M.M. Rahman). Contents lists available at ScienceDirect Energy Strategy Reviews journal homepage: www.ees.elsevier.com/esr https://doi.org/10.1016/j.esr.2017.09.017 2211-467X/© 2017 Elsevier Ltd. All rights reserved. Energy Strategy Reviews 18 (2017) 183e198