IDEAS home Printed from https://ideas.repec.org/p/ssb/dispap/527.html
   My bibliography  Save this paper

How do Spot prices affect aggregate electricity demand?

Author

Listed:

Abstract

All participants in power exchanges are interested in market responses when electricity prices change because this influences the profitability of actions. Contrary to most econometric work in this field, which uses annual time series or panel data, we exploit high-frequency data from a power exchange to estimate the spot price elasticities of the total market and of different market segments. The use of such data requires a simultaneous market model including both behavioral and control variables to capture short-term shifts in both demand and supply. Compared with Wolfram (1999) our short-term responses to spot market prices are not straightforward because the picture is confused by differences in production flexibilities in a complex and heterogeneous supply side, demand technologies and a combination of different end-user contracts. We show that short- and long-run price effects on demand differ significantly among hours, weekdays, seasons, and countries.

Suggested Citation

  • Torstein Bye & Petter Vegard Hansen, 2008. "How do Spot prices affect aggregate electricity demand?," Discussion Papers 527, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:527
    as

    Download full text from publisher

    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp527.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Littlechild, Stephen, 2006. "Competition and contracts in the Nordic residential electricity markets," Utilities Policy, Elsevier, vol. 14(3), pages 135-147, September.
    2. Amundsen, Eirik S. & Bergman, Lars, 2007. "Integration of multiple national markets for electricity: The case of Norway and Sweden," Energy Policy, Elsevier, vol. 35(6), pages 3383-3394, June.
    3. Torstein Bye & Einar Hope, 2005. "Deregulation of electricity markets : The Norwegian experience," Discussion Papers 433, Statistics Norway, Research Department.
    4. Dahl, Carol A., 1993. "A survey of energy demand elasticities in support of the development of the NEMS," MPRA Paper 13962, University Library of Munich, Germany.
    5. Bye, Torstein & Bruvoll, Annegrete & Aune, Finn Roar, 2008. "Inflow shortages in deregulated power markets -- Reasons for concern?," Energy Economics, Elsevier, vol. 30(4), pages 1693-1711, July.
    6. Amundsen, Eirik S. & Bergman, Lars, 2006. "Why has the Nordic electricity market worked so well?," Utilities Policy, Elsevier, vol. 14(3), pages 148-157, September.
    7. Nesbakken, Runa, 1999. "Price sensitivity of residential energy consumption in Norway," Energy Economics, Elsevier, vol. 21(6), pages 493-515, December.
    8. Johnsen, Tor Arnt, 2001. "Demand, generation and price in the Norwegian market for electric power," Energy Economics, Elsevier, vol. 23(3), pages 227-251, May.
    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. Maria Kopsakangas-Savolainen & Rauli Svento, 2013. "Economic Value Approach to Intermittent Power Generation in the Nordic Power Markets," Energy and Environment Research, Canadian Center of Science and Education, vol. 3(2), pages 139-139, December.
    2. Kopsakangas Savolainen, Maria & Svento, Rauli, 2012. "Real-Time Pricing in the Nordic Power markets," Energy Economics, Elsevier, vol. 34(4), pages 1131-1142.
    3. Bye, Torstein & Bruvoll, Annegrete & Aune, Finn Roar, 2008. "Inflow shortages in deregulated power markets -- Reasons for concern?," Energy Economics, Elsevier, vol. 30(4), pages 1693-1711, July.
    4. Mirza, Faisal Mehmood & Bergland, Olvar, 2011. "The impact of daylight saving time on electricity consumption: Evidence from southern Norway and Sweden," Energy Policy, Elsevier, vol. 39(6), pages 3558-3571, June.
    5. Mattila, Juri, . "Blockchain Systems as Multi-sided Platforms," ETLA A, The Research Institute of the Finnish Economy, number 51, June.

    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. Nils-Henrik M. von der Fehr & Petter Vegard Hansen, 2010. "Electricity Retailing in Norway," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 25-46.
    2. Vesterberg, Mattias, 2017. "Power to the people: Electricity demand and household behavior," Umeå Economic Studies 942, Umeå University, Department of Economics.
    3. Sandsmark, Maria, 2009. "A regional energy paradox--the case of Central Norway," Energy Policy, Elsevier, vol. 37(11), pages 4549-4556, November.
    4. Lyu, Chenyan & Do, Hung Xuan & Nepal, Rabindra & Jamasb, Tooraj, 2024. "Volatility spillovers and carbon price in the Nordic wholesale electricity markets," Energy Economics, Elsevier, vol. 134(C).
    5. Eero Lehto, 2010. "Electricity prices in the Finnish retail market," Working Papers 259, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    6. Hanimann, Raphael & Vinterbäck, Johan & Mark-Herbert, Cecilia, 2015. "Consumer behavior in renewable electricity: Can branding in accordance with identity signaling increase demand for renewable electricity and strengthen supplier brands?," Energy Policy, Elsevier, vol. 78(C), pages 11-21.
    7. Oseni, Musiliu O. & Pollitt, Michael G., 2014. "Institutional arrangements for the promotion of regional integration of electricity markets : international experience," Policy Research Working Paper Series 6947, The World Bank.
    8. Johnsen, Tor Arnt & Olsen, Ole Jess, 2011. "Regulated and unregulated Nordic retail prices," Energy Policy, Elsevier, vol. 39(6), pages 3337-3345, June.
    9. Amundsen, Eirik S. & Bergman, Lars, 2007. "Provision of operating reserve capacity: Principles and practices on the Nordic Electricity Market," MPRA Paper 10861, University Library of Munich, Germany.
    10. Gencer, Busra & Larsen, Erik Reimer & van Ackere, Ann, 2020. "Understanding the coevolution of electricity markets and regulation," Energy Policy, Elsevier, vol. 143(C).
    11. Krauss, Alexander, 2016. "How natural gas tariff increases can influence poverty: Results, measurement constraints and bias," Energy Economics, Elsevier, vol. 60(C), pages 244-254.
    12. Weigt, Hannes, 2009. "A Review of Liberalization and Modeling of Electricity Markets," MPRA Paper 65651, University Library of Munich, Germany.
    13. Woo, C.K. & Shiu, A. & Liu, Y. & Luo, X. & Zarnikau, J., 2018. "Consumption effects of an electricity decarbonization policy: Hong Kong," Energy, Elsevier, vol. 144(C), pages 887-902.
    14. Fatras, Nicolas & Ma, Zheng & Duan, Hongbo & Jørgensen, Bo Nørregaard, 2022. "A systematic review of electricity market liberalisation and its alignment with industrial consumer participation: A comparison between the Nordics and China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 167(C).
    15. Vesterberg, Mattias, 2018. "The effect of price on electricity contract choice," Energy Economics, Elsevier, vol. 69(C), pages 59-70.
    16. Ericson, Torgeir, 2009. "Direct load control of residential water heaters," Energy Policy, Elsevier, vol. 37(9), pages 3502-3512, September.
    17. Vesterberg, Mattias, 2017. "The effect of price on electricity contract choice," Umeå Economic Studies 941, Umeå University, Department of Economics.
    18. Oseni, Musiliu O. & Pollitt, Michael G., 2016. "The promotion of regional integration of electricity markets: Lessons for developing countries," Energy Policy, Elsevier, vol. 88(C), pages 628-638.
    19. Førsund, Finn R., 2009. "Energy in a Bathtub: Electricity Trade between Countries with Different Generation Technologies," Memorandum 17/2009, Oslo University, Department of Economics.
    20. Lehto, Eero, 2011. "Electricity prices in the Finnish retail market," Energy Policy, Elsevier, vol. 39(4), pages 2179-2192, April.

    More about this item

    Keywords

    Electricity demand; Simultaneous markets; High Frequent data; Electricity Exhange;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

    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:ssb:dispap:527. 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: L Maasø (email available below). General contact details of provider: https://edirc.repec.org/data/ssbgvno.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.