IDEAS home Printed from https://ideas.repec.org/p/esr/wpaper/rb2014-2-2.html
   My bibliography  Save this paper

Estimating the Impact of Time-of-Use Pricing on Irish Electricity Demand

Author

Listed:
  • di Cosmo, Valeria
  • Lyons, Seán
  • Nolan, Anne

Abstract

Smart meters, in conjunction with time-of-use (TOU) pricing, can facilitate an improvement in energy efficiency by providing consumers with enhanced information about electricity consumption and costs, and thereby encourage a shift away from consumption during peak hours. In 2009-10, the Irish Commission for Energy Regulation co-ordinated a randomised controlled trial in the Irish residential electricity market. Smart meters were introduced in approximately 5,000 households, divided into control and treatment groups, with treatment groups exposed to a variety of TOU tariffs and information stimuli. This paper analyses the response of Irish households at different times of the day to the introduction of TOU tariffs and information stimuli. We find that these measures have a significant effect in reducing electricity consumption in Ireland, particularly during peak hours. However, while households reduce peak demand significantly after the introduction of TOU tariffs and associated information, there is little incremental response to increasing differentials between peak and off-peak prices.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • di Cosmo, Valeria & Lyons, Seán & Nolan, Anne, 2014. "Estimating the Impact of Time-of-Use Pricing on Irish Electricity Demand," Papers RB2014/2/2, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:rb2014/2/2
    as

    Download full text from publisher

    File URL: https://www.esri.ie/pubs/RB20140202.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alberini, Anna & Gans, Will & Velez-Lopez, Daniel, 2011. "Residential Consumption of Gas and Electricity in the U.S.: The Role of Prices and Income," Sustainable Development Papers 99637, Fondazione Eni Enrico Mattei (FEEM).
    2. Maria Gleerup & Anders Larsen & Soren Leth-Petersen & Mikael Togeby, 2010. "The Effect of Feedback by Text Message (SMS) and Email on Household Electricity Consumption: Experimental Evidence," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 113-132.
    3. Aubin, Christophe, et al, 1995. "Real-Time Pricing of Electricity for Residential Customers: Econometric Analysis of an Experiment," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(S), pages 171-191, Suppl. De.
    4. Michael G. Pollitt & Irina Shaorshadze, 2013. "The role of behavioural economics in energy and climate policy," Chapters, in: Roger Fouquet (ed.), Handbook on Energy and Climate Change, chapter 24, pages 523-546, Edward Elgar Publishing.
    5. Hunt Allcott, 2011. "Consumers' Perceptions and Misperceptions of Energy Costs," American Economic Review, American Economic Association, vol. 101(3), pages 98-104, May.
    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. Allcott, Hunt, 2011. "Rethinking real-time electricity pricing," Resource and Energy Economics, Elsevier, vol. 33(4), pages 820-842.
    8. Alberini, Anna & Gans, Will & Velez-Lopez, Daniel, 2011. "Residential consumption of gas and electricity in the U.S.: The role of prices and income," Energy Economics, Elsevier, vol. 33(5), pages 870-881, September.
    9. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    10. Frank A. Wolak, 2011. "Do Residential Customers Respond to Hourly Prices? Evidence from a Dynamic Pricing Experiment," American Economic Review, American Economic Association, vol. 101(3), pages 83-87, May.
    11. Filippini, Massimo, 1995. "Swiss residential demand for electricity by time-of-use," Resource and Energy Economics, Elsevier, vol. 17(3), pages 281-290, November.
    12. Matsukawa, Isamu, 2001. "Household Response to Optional Peak-Load Pricing of Electricity," Journal of Regulatory Economics, Springer, vol. 20(3), pages 249-267, November.
    13. Massimo, Filippini, 2011. "Short- and long-run time-of-use price elasticities in Swiss residential electricity demand," Energy Policy, Elsevier, vol. 39(10), pages 5811-5817, October.
    14. Bartusch, Cajsa & Wallin, Fredrik & Odlare, Monica & Vassileva, Iana & Wester, Lars, 2011. "Introducing a demand-based electricity distribution tariff in the residential sector: Demand response and customer perception," Energy Policy, Elsevier, vol. 39(9), pages 5008-5025, September.
    15. Baker, Paul & Blundell, Richard & Micklewright, John, 1989. "Modelling Household Energy Expenditures Using Micro-data," Economic Journal, Royal Economic Society, vol. 99(397), pages 720-738, September.
    16. Gans, Will & Alberini, Anna & Longo, Alberto, 2011. "Smart Meter Devices and The Effect of Feedback on Residential Electricity Consumption: Evidence from a Natural Experiment in Northern Ireland," Energy: Resources and Markets 108202, Fondazione Eni Enrico Mattei (FEEM).
    17. Dulleck, Uwe & Kaufmann, Sylvia, 2004. "Do customer information programs reduce household electricity demand?--the Irish program," Energy Policy, Elsevier, vol. 32(8), pages 1025-1032, June.
    18. Peter C. Reiss & Matthew W. White, 2005. "Household Electricity Demand, Revisited," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(3), pages 853-883.
    19. Koichiro Ito, 2014. "Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing," American Economic Review, American Economic Association, vol. 104(2), pages 537-563, February.
    20. Caves, Douglas W. & Christensen, Laurits R., 1980. "Econometric analysis of residential time-of-use electricity pricing experiments," Journal of Econometrics, Elsevier, vol. 14(3), pages 287-306, December.
    Full references (including those not matched with items on IDEAS)

    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. Boßmann, Tobias & Eser, Eike Johannes, 2016. "Model-based assessment of demand-response measures—A comprehensive literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 1637-1656.
    2. Almas Heshmati, 2014. "Demand, Customer Base-Line And Demand Response In The Electricity Market: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 862-888, December.
    3. Lanot, Gauthier & Vesterberg, Mattias, 2021. "The price elasticity of electricity demand when marginal incentives are very large," Energy Economics, Elsevier, vol. 104(C).
    4. Kiran B Krishnamurthy, Chandra & Kriström, Bengt, 2013. "A cross-country analysis of residential electricity demand in 11 OECD-countries," CERE Working Papers 2013:5, CERE - the Center for Environmental and Resource Economics, revised 30 Jun 2014.
    5. Nina Boogen & Souvik Datta & Massimo Filippini, 2014. "Going beyond tradition: Estimating residential electricity demand using an appliance index and energy services," CER-ETH Economics working paper series 14/200, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    6. Xiaojia Bao, 2016. "Water, Electricity and Weather Variability in Rural Northern China," Working Papers 2014-07-02, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    7. Boogen, Nina & Datta, Souvik & Filippini, Massimo, 2021. "Estimating residential electricity demand: New empirical evidence," Energy Policy, Elsevier, vol. 158(C).
    8. Kim, Jihyo & Lee, Soomin & Jang, Heesun, 2022. "Lessons from residential electricity demand analysis on the time of use pricing experiment in South Korea," Energy Economics, Elsevier, vol. 113(C).
    9. Jessoe, Katrina & Rapson, David & Smith, Jeremy B., 2014. "Towards understanding the role of price in residential electricity choices: Evidence from a natural experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 191-208.
    10. 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.
    11. Tilov, Ivan & Farsi, Mehdi & Volland, Benjamin, 2020. "From frugal Jane to wasteful John: A quantile regression analysis of Swiss households’ electricity demand," Energy Policy, Elsevier, vol. 138(C).
    12. Çetinkaya, Murat & Başaran, Alparslan A. & Bağdadioğlu, Necmiddin, 2015. "Electricity reform, tariff and household elasticity in Turkey," Utilities Policy, Elsevier, vol. 37(C), pages 79-85.
    13. Miller, Mark & Alberini, Anna, 2016. "Sensitivity of price elasticity of demand to aggregation, unobserved heterogeneity, price trends, and price endogeneity: Evidence from U.S. Data," Energy Policy, Elsevier, vol. 97(C), pages 235-249.
    14. Krishnamurthy, Chandra Kiran B. & Kriström, Bengt, 2015. "A cross-country analysis of residential electricity demand in 11 OECD-countries," Resource and Energy Economics, Elsevier, vol. 39(C), pages 68-88.
    15. Ohler, Adrienne M. & Billger, Sherrilyn M., 2014. "Does environmental concern change the tragedy of the commons? Factors affecting energy saving behaviors and electricity usage," Ecological Economics, Elsevier, vol. 107(C), pages 1-12.
    16. Alberini, Anna & Bezhanishvili, Levan & Ščasný, Milan, 2022. "“Wild” tariff schemes: Evidence from the Republic of Georgia," Energy Economics, Elsevier, vol. 110(C).
    17. Stéphane Auray & Vincenzo Caponi & Benoît Ravel, 2019. "Price Elasticity of Electricity Demand in France," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 513, pages 91-103.
    18. Helena Meier, Tooraj Jamasb, and Luis Orea, 2013. "Necessity or Luxury Good? Household Energy Spending and Income in Britain 1991-2007," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    19. Robert W. Hahn & Robert D. Metcalfe, 2021. "Efficiency and Equity Impacts of Energy Subsidies," American Economic Review, American Economic Association, vol. 111(5), pages 1658-1688, May.
    20. Becka Brolinson, 2019. "Does Increasing Block Pricing Decrease Energy Use? Evidence from the Residential Electricity Market," Working Papers gueconwpa~19-19-06, Georgetown University, Department of Economics.

    More about this item

    Keywords

    electricity;

    JEL classification:

    • F0 - International Economics - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:esr:wpaper:rb2014/2/2. 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: Sarah Burns (email available below). General contact details of provider: https://edirc.repec.org/data/esriiie.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.