Abstract Electricity markets increasingly rely on residential demand-side flexibility to integrate renewables and stabilize the grid. While dynamic tariffs can unlock short-term flexibility, they expose households to a risk–reward trade-off. This paper quantifies how home battery storage reshapes the trade-off across residential energy services modeled with three different load types (elastic, interruptible and non-interruptible). Using load profiles from a German utility and an optimal-control scheduling framework under mixed dynamic tariffs, we evaluate cost and risk impacts over a range of storage sizes. Three results stand out. First, small batteries deliver most of the value: a capacity of about 20% of average daily demand captures roughly two-thirds of attainable savings while already lowering bill risk. Second, cost reduction potential is heterogeneous across devices: Elastic loads profit the most from additional storage capacities ; Non-interruptible and Interruptible loads profit less. Third, overall returns diminish and effectively plateau near a capacity of 60% of average daily demand. These findings offer actionable guidance: pair dynamic tariffs with modest storage to achieve substantial savings and risk reduction—especially in low-flexibility or strongly market-aligned households—and avoid over-investment in regards to diminishing returns.
Ameling et al. (2026) studied this question.