IDEAS home Printed from https://ideas.repec.org/a/aen/eeepjl/3-1-a05.html
   My bibliography  Save this article

Demand Side Response: Patterns in Europe and Future Policy Perspectives under Capacity Mechanisms

Author

Listed:
  • Jacopo Torriti
  • Philipp Grunewald

Abstract

Demand Side Response (DSR) has been slow to emerge in European electricity markets. This paper aims to both examine the reasons for low levels of DSR in Europe and reflect on factors that might affect the participation of DSR in capacity mechanisms. It relies on available evidence from the literature, secondary data on existing DSR programmes and energy aggregator's data from industries participating in DSR. Findings show that changes to the duration of contracted loads under existing or new programmes might increase the penetration of DSR. The introduction of capacity mechanisms may increase DSR from demand turn down if longer response times were available.

Suggested Citation

  • Jacopo Torriti & Philipp Grunewald, 2014. "Demand Side Response: Patterns in Europe and Future Policy Perspectives under Capacity Mechanisms," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    • Handle: RePEc:aen:eeepjl:3-1-a05
    as

    Download full text from publisher

    File URL: http://www.iaee.org/en/publications/eeeparticle.aspx?id=59
    Download Restriction: Access to full text is restricted to IAEE members and subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Karsten Neuhoff & Laurens De Vries, 2004. "Insufficient Incentives for Investment," Working Papers EP42, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Torriti, Jacopo, 2012. "Price-based demand side management: Assessing the impacts of time-of-use tariffs on residential electricity demand and peak shifting in Northern Italy," Energy, Elsevier, vol. 44(1), pages 576-583.
    3. Batlle, Carlos & Pérez-Arriaga, Ignacio J., 2008. "Design criteria for implementing a capacity mechanism in deregulated electricity markets," Utilities Policy, Elsevier, vol. 16(3), pages 184-193, September.
    4. Tooraj Jamasb and Michael Pollitt, 2005. "Electricity Market Reform in the European Union: Review of Progress toward Liberalization & Integration," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 11-42.
    5. Akorede, Mudathir Funsho & Hizam, Hashim & Pouresmaeil, Edris, 2010. "Distributed energy resources and benefits to the environment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(2), pages 724-734, February.
    6. Gans, Will & Alberini, Anna & Longo, Alberto, 2013. "Smart meter devices and the effect of feedback on residential electricity consumption: Evidence from a natural experiment in Northern Ireland," Energy Economics, Elsevier, vol. 36(C), pages 729-743.
    7. Bernard, Jean-Thomas & Roland, Michel, 2000. "Load management programs, cross-subsidies and transaction costs: the case of self-rationing," Resource and Energy Economics, Elsevier, vol. 22(2), pages 161-188, May.
    8. Herter, Karen & McAuliffe, Patrick & Rosenfeld, Arthur, 2007. "An exploratory analysis of California residential customer response to critical peak pricing of electricity," Energy, Elsevier, vol. 32(1), pages 25-34.
    9. Henley, Andrew & Peirson, John, 1997. "Non-linearities in Electricity Demand and Temperature: Parametric versus Non-parametric Methods," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(1), pages 149-162, February.
    10. Dominique Finon & Virginie Pignon, 2008. "Electricity and long-term capacity adequacy: The quest for regulatory mechanism compatible with electricity market," Post-Print hal-00716312, HAL.
    11. repec:bla:jcmkts:v:48:y:2010:i::p:1065-1081 is not listed on IDEAS
    12. Torriti, Jacopo & Hassan, Mohamed G. & Leach, Matthew, 2010. "Demand response experience in Europe: Policies, programmes and implementation," Energy, Elsevier, vol. 35(4), pages 1575-1583.
    13. Neuhoff, Karsten & De Vries, Laurens, 2004. "Insufficient incentives for investment in electricity generations," Utilities Policy, Elsevier, vol. 12(4), pages 253-267, December.
    14. Cramton, Peter & Stoft, Steven, 2005. "A Capacity Market that Makes Sense," The Electricity Journal, Elsevier, vol. 18(7), pages 43-54.
    15. Douglas W. Caves & Joseph A. Herriges & Robert J. Windle, 1992. "The Cost of Electric Power Interruptions in the Industrial Sector: Estimates Derived from Interruptible Service Programs," Land Economics, University of Wisconsin Press, vol. 68(1), pages 49-61.
    16. Torriti, Jacopo, 2012. "Demand Side Management for the European Supergrid: Occupancy variances of European single-person households," Energy Policy, Elsevier, vol. 44(C), pages 199-206.
    17. Faruqui, Ahmad & Harris, Dan & Hledik, Ryan, 2010. "Unlocking the [euro]53 billion savings from smart meters in the EU: How increasing the adoption of dynamic tariffs could make or break the EU's smart grid investment," Energy Policy, Elsevier, vol. 38(10), pages 6222-6231, October.
    18. Bernard, Jean-Thomas & Bolduc, Denis & Yameogo, Nadège-Désirée, 2011. "A pseudo-panel data model of household electricity demand," Resource and Energy Economics, Elsevier, vol. 33(1), pages 315-325, January.
    19. Herriges, Joseph A. & Caves, Douglas W. & Windle, R. J., 1992. "The Cost of Power Interruptions in the Industrial Sector: Estimates Derived from Interruptible Service Programs," Staff General Research Papers Archive 10789, Iowa State University, Department of Economics.
    20. Barton, John & Huang, Sikai & Infield, David & Leach, Matthew & Ogunkunle, Damiete & Torriti, Jacopo & Thomson, Murray, 2013. "The evolution of electricity demand and the role for demand side participation, in buildings and transport," Energy Policy, Elsevier, vol. 52(C), pages 85-102.
    21. Faruqui, Ahmad & Sergici, Sanem & Sharif, Ahmed, 2010. "The impact of informational feedback on energy consumption—A survey of the experimental evidence," Energy, Elsevier, vol. 35(4), pages 1598-1608.
    22. Newbery, David M., 2002. "Problems of liberalising the electricity industry," European Economic Review, Elsevier, vol. 46(4-5), pages 919-927, May.
    23. Darby, Sarah J. & McKenna, Eoghan, 2012. "Social implications of residential demand response in cool temperate climates," Energy Policy, Elsevier, vol. 49(C), pages 759-769.
    24. Shin, Jeong-Shik, 1985. "Perception of Price When Price Information Is Costly: Evidence from Residential Electricity Demand," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 591-598, November.
    25. Finon, Dominique & Pignon, Virginie, 2008. "Electricity and long-term capacity adequacy: The quest for regulatory mechanism compatible with electricity market," Utilities Policy, Elsevier, vol. 16(3), pages 143-158, September.
    26. Gehring, Kay L., 2002. "Can Yesterday's Demand-Side Management Lessons Become Tomorrow's Market Solutions?," The Electricity Journal, Elsevier, vol. 15(5), pages 63-69, June.
    27. Garcia-Cerrutti, L. Miguel, 2000. "Estimating elasticities of residential energy demand from panel county data using dynamic random variables models with heteroskedastic and correlated error terms," Resource and Energy Economics, Elsevier, vol. 22(4), pages 355-366, October.
    28. Grünewald, Philipp & Torriti, Jacopo, 2013. "Demand response from the non-domestic sector: Early UK experiences and future opportunities," Energy Policy, Elsevier, vol. 61(C), pages 423-429.
    29. Aalami, H.A. & Moghaddam, M. Parsa & Yousefi, G.R., 2010. "Demand response modeling considering Interruptible/Curtailable loads and capacity market programs," Applied Energy, Elsevier, vol. 87(1), pages 243-250, January.
    30. Turvey, R., 2003. "Ensuring adequate generation capacity," Utilities Policy, Elsevier, vol. 11(2), pages 95-102, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paterakis, Nikolaos G. & Erdinç, Ozan & Catalão, João P.S., 2017. "An overview of Demand Response: Key-elements and international experience," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 871-891.
    2. Jacopo Torriti, 2022. "Household electricity demand, the intrinsic flexibility index and UK wholesale electricity market prices," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 24(1), pages 7-27, January.
    3. Olsthoorn, Mark & Schleich, Joachim & Klobasa, Marian, 2015. "Barriers to electricity load shift in companies: A survey-based exploration of the end-user perspective," Energy Policy, Elsevier, vol. 76(C), pages 32-42.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Torriti, Jacopo, 2013. "The significance of occupancy steadiness in residential consumer response to Time-of-Use pricing: Evidence from a stochastic adjustment model," Utilities Policy, Elsevier, vol. 27(C), pages 49-56.
    2. Heidarizadeh, Mohammad & Ahmadian, Mohammad, 2019. "Capacity certificate mechanism: A step forward toward a market based generation capacity incentive," Energy, Elsevier, vol. 172(C), pages 45-56.
    3. Simshauser, Paul, 2020. "Merchant renewables and the valuation of peaking plant in energy-only markets," Energy Economics, Elsevier, vol. 91(C).
    4. Gils, Hans Christian, 2014. "Assessment of the theoretical demand response potential in Europe," Energy, Elsevier, vol. 67(C), pages 1-18.
    5. Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Energy Policy, Elsevier, vol. 171(C).
    6. Torriti, Jacopo, 2012. "Price-based demand side management: Assessing the impacts of time-of-use tariffs on residential electricity demand and peak shifting in Northern Italy," Energy, Elsevier, vol. 44(1), pages 576-583.
    7. Simshauser, Paul, 2019. "Missing money, missing policy and Resource Adequacy in Australia's National Electricity Market," Utilities Policy, Elsevier, vol. 60(C), pages 1-1.
    8. Gils, Hans Christian, 2016. "Economic potential for future demand response in Germany – Modeling approach and case study," Applied Energy, Elsevier, vol. 162(C), pages 401-415.
    9. Ochoa, Camila & van Ackere, Ann, 2015. "Does size matter? Simulating electricity market coupling between Colombia and Ecuador," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 1108-1124.
    10. de Vries, Laurens & Heijnen, Petra, 2008. "The impact of electricity market design upon investment under uncertainty: The effectiveness of capacity mechanisms," Utilities Policy, Elsevier, vol. 16(3), pages 215-227, September.
    11. Dominique Finon, 2011. "Investment and Competition in Decentralized Electricity Markets: How to Overcome Market Failure by Market Imperfections?," Chapters, in: Jean-Michel Glachant & Dominique Finon & Adrien de Hauteclocque (ed.), Competition, Contracts and Electricity Markets, chapter 3, Edward Elgar Publishing.
    12. Bublitz, Andreas & Keles, Dogan & Zimmermann, Florian & Fraunholz, Christoph & Fichtner, Wolf, 2019. "A survey on electricity market design: Insights from theory and real-world implementations of capacity remuneration mechanisms," Energy Economics, Elsevier, vol. 80(C), pages 1059-1078.
    13. Mastropietro, Paolo & Herrero, Ignacio & Rodilla, Pablo & Batlle, Carlos, 2016. "A model-based analysis on the impact of explicit penalty schemes in capacity mechanisms," Applied Energy, Elsevier, vol. 168(C), pages 406-417.
    14. Roques, Fabien & Finon, Dominique, 2017. "Adapting electricity markets to decarbonisation and security of supply objectives: Toward a hybrid regime?," Energy Policy, Elsevier, vol. 105(C), pages 584-596.
    15. Bradley, Peter & Coke, Alexia & Leach, Matthew, 2016. "Financial incentive approaches for reducing peak electricity demand, experience from pilot trials with a UK energy provider," Energy Policy, Elsevier, vol. 98(C), pages 108-120.
    16. Bublitz, Andreas & Keles, Dogan & Zimmermann, Florian & Fraunholz, Christoph & Fichtner, Wolf, 2018. "A survey on electricity market design: Insights from theory and real-world implementations of capacity remuneration mechanisms," Working Paper Series in Production and Energy 27, Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP).
    17. Feuerriegel, Stefan & Neumann, Dirk, 2014. "Measuring the financial impact of demand response for electricity retailers," Energy Policy, Elsevier, vol. 65(C), pages 359-368.
    18. Yunusov, Timur & Torriti, Jacopo, 2021. "Distributional effects of Time of Use tariffs based on electricity demand and time use," Energy Policy, Elsevier, vol. 156(C).
    19. Simshauser, Paul, 2022. "Rooftop solar PV and the peak load problem in the NEM's Queensland region," Energy Economics, Elsevier, vol. 109(C).
    20. Mark Miller & Anna Alberini, 2015. "Sensitivity of price elasticity of demand to aggregation, unobserved heterogeneity, price trends, and price endogeneity: Evidence from U.S. Data," CER-ETH Economics working paper series 15/223, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

    More about this item

    JEL classification:

    • F0 - International Economics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aen:eeepjl:3-1-a05. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: David Williams (email available below). General contact details of provider: https://edirc.repec.org/data/iaeeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.