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The Effect of Information on TOU Electricity Use: an Irish residential study

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  • Shirley Pon

Abstract

Flexibility is becoming an increasingly important attribute of conventional generators due to the challenges imposed by the unpredictable, highly variable and non-controllable nature of renewable supply. Paradoxically, flexible units are currently being mothballed or retired in Europe due to financial losses. We investigate an energy-only market design, referred to as operating reserve demand curves, that rewards flexibility by adjusting the real-time energy price to a level that reflects the value of capacity under conditions of scarcity. We test the performance of the mechanism by developing a model of the Belgian electricity market, which is validated against the historical outcomes of the market over a study period of 21 months. We verify that (i) based on the observed market outcomes of our study period, none of the existing combined cycle gas turbines of the Belgian market can cover their investment costs, and (ii) the introduction of price adders that reflect the true value of scarce flexible capacity restores economic viability for most combined cycle gas turbines in the Belgian market.

Suggested Citation

  • Shirley Pon, 2017. "The Effect of Information on TOU Electricity Use: an Irish residential study," The Energy Journal, International Association for Energy Economics, vol. 0(Number 6).
    • Handle: RePEc:aen:journl:ej38-6-pon
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    Cited by:

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    3. Liddle, Brantley & Loi, Tian Sheng Allan & Owen, Anthony D. & Tao, Jacqueline, 2020. "Evaluating consumption and cost savings from new air-conditioner purchases: The case of Singapore," Energy Policy, Elsevier, vol. 145(C).
    4. Heidi S. Nygård & Stig Ødegaard Ottesen & Olav Henrik Skonnord, 2024. "Profitability Analyses for Residential Battery Investments: A Norwegian Case Study," Energies, MDPI, vol. 17(16), pages 1-18, August.
    5. Manuel Frondel and Gerhard Kussel, 2019. "Switching on Electricity Demand Response: Evidence for German Households," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    6. Dato, Prudence & Durmaz, Tunç & Pommeret, Aude, 2020. "Smart grids and renewable electricity generation by households," Energy Economics, Elsevier, vol. 86(C).
    7. Nemati, Mehdi & Penn, Jerrod, 2018. "The Impact of Social Norms, Feedback, and Price Information on Conservation Behavior: A Meta-Analysis," 2018 Annual Meeting, August 5-7, Washington, D.C. 274431, Agricultural and Applied Economics Association.
    8. Puja Singhal, 2020. "Inform Me When It Matters: Cost Salience, Energy Consumption, and Efficiency Investments," Discussion Papers of DIW Berlin 1891, DIW Berlin, German Institute for Economic Research.

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