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Heterogeneity in Price Responsiveness for Residential Space Heating in Germany

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  • Schmitz, Hendrik

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Madlener, Reinhard

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

Abstract

Space heating and hot water expenditures make up the majority of household energy demand in Germany, at 83.2%, making them an attractive target for energy policies. Using a panel dataset derived from yearly residential household surveys covering the years 1996 to 2014, we identify the determinants of heating expenditures for German households. We discover significant heterogeneity in expenditures depending on socioeconomic variables. For the full sample, we find a price elasticity of heating expenditures of 0.629. Elasticities vary significantly between individual groups, with values ranging from 0.523 to 0.716. Furthermore, a large number of technical and socio-demographic factors are significant in determining energy use. Our findings have implications for evaluating the effectiveness of policy measures that aim at influencing energy use across different groups of consumers.

Suggested Citation

  • Schmitz, Hendrik & Madlener, Reinhard, 2016. "Heterogeneity in Price Responsiveness for Residential Space Heating in Germany," FCN Working Papers 5/2015, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Nov 2016.
    • Handle: RePEc:ris:fcnwpa:2015_005
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    2. Anders Rhiger Hansen & Daniel Leiria & Hicham Johra & Anna Marszal-Pomianowska, 2022. "Who Produces the Peaks? Household Variation in Peak Energy Demand for Space Heating and Domestic Hot Water," Energies, MDPI, vol. 15(24), pages 1-23, December.
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    5. Wang, Xia & Fang, Yuan & Cai, Weiguang & Ding, Chao & Xie, Yupei, 2022. "Heating demand with heterogeneity in residential households in the hot summer and cold winter climate zone in China -A quantile regression approach," Energy, Elsevier, vol. 247(C).
    6. Trotta, Gianluca & Hansen, Anders Rhiger & Sommer, Stephan, 2022. "The price elasticity of residential district heating demand: New evidence from a dynamic panel approach," Energy Economics, Elsevier, vol. 112(C).
    7. Wang, Xia & Ding, Chao & Zhou, Mao & Cai, Weiguang & Ma, Xianrui & Yuan, Jiachen, 2023. "Assessment of space heating consumption efficiency based on a household survey in the hot summer and cold winter climate zone in China," Energy, Elsevier, vol. 274(C).
    8. Mats Kröger & Maximilian Longmuir & Karsten Neuhoff & Franziska Schütze, 2022. "The Costs of Natural Gas Dependency: Price Shocks, Inequality, and Public Policy," Discussion Papers of DIW Berlin 2010, DIW Berlin, German Institute for Economic Research.
    9. Kröger, Mats & Longmuir, Maximilian & Neuhoff, Karsten & Schütze, Franziska, 2023. "The price of natural gas dependency: Price shocks, inequality, and public policy," Energy Policy, Elsevier, vol. 175(C).

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    More about this item

    Keywords

    Germany; Space heating; Heating expenditures; Heterogeneity;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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