IDEAS home Printed from https://ideas.repec.org/a/bla/jecsur/v28y2014i5p862-888.html
   My bibliography  Save this article

Demand, Customer Base-Line And Demand Response In The Electricity Market: A Survey

Author

Listed:
  • Almas Heshmati

Abstract

The increasing use of demand-side management, as a tool to reliably meet electricity demands at peak time, has stimulated interest among researchers, consumers and producer organiza-tions, managers, regulators and policymakers. This research reviews the growing literature on models which are used to study demand, customer base-line (CBL) and demand response in the electricity market. After characterizing the general demand models, the CBL, based on which the demand response models are studied, is reviewed. Given the experience gained from the review and existing conditions, the study combines an appropriate model for each case for a possible application to the electricity market; moreover, it discusses the implications of the results. In the literature, these aspects are studied independently. The main contribution of this survey is attributed to the treatment of the three issues as sequentially interdependent. The review is expected to enhance the understanding of the demand, CBL and demand response in the electricity market and their relationships. The objective is conducted through a combination of demand and supply side managements in order to reduce demand through different demand response programs during peak times. This enables electricity suppliers to save costly electricity generation and at the same time reduce energy vulnerability.

Suggested Citation

  • 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.
    • Handle: RePEc:bla:jecsur:v:28:y:2014:i:5:p:862-888
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/joes.12033
    Download Restriction: Access to full text is restricted to 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. Kucukali, Serhat, 2010. "Comments on "Energy demand estimation of South Korea using artificial neural network" by Zong Woo Geem and William E. Roper," Energy Policy, Elsevier, vol. 38(10), pages 6379-6380, October.
    2. Lee, Chien-Chiang & Chiu, Yi-Bin, 2011. "Electricity demand elasticities and temperature: Evidence from panel smooth transition regression with instrumental variable approach," Energy Economics, Elsevier, vol. 33(5), pages 896-902, September.
    3. Pedro Linares & Xavier Labandeira, 2010. "Energy Efficiency: Economics And Policy," Journal of Economic Surveys, Wiley Blackwell, vol. 24(3), pages 573-592, July.
    4. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    5. Geem, Zong Woo & Roper, William E., 2009. "Energy demand estimation of South Korea using artificial neural network," Energy Policy, Elsevier, vol. 37(10), pages 4049-4054, October.
    6. 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.
    7. Zibelman, Audrey & Krapels, Edward N., 2008. "Deployment of Demand Response as a Real-Time Resource in Organized Markets," The Electricity Journal, Elsevier, vol. 21(5), pages 51-56, June.
    8. Chao, Hung-po, 2010. "Price-Responsive Demand Management for a Smart Grid World," The Electricity Journal, Elsevier, vol. 23(1), pages 7-20, January.
    9. Alberto Cavaliere & Simona Scabrosetti, 2008. "Privatization And Efficiency: From Principals And Agents To Political Economy," Journal of Economic Surveys, Wiley Blackwell, vol. 22(4), pages 685-710, September.
    10. Andrew C. Worthington & Mark Hoffman, 2008. "An Empirical Survey Of Residential Water Demand Modelling," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 842-871, December.
    11. Dilaver, Zafer & Hunt, Lester C., 2011. "Industrial electricity demand for Turkey: A structural time series analysis," Energy Economics, Elsevier, vol. 33(3), pages 426-436, May.
    12. Berry, David, 2008. "The impact of energy efficiency programs on the growth of electricity sales," Energy Policy, Elsevier, vol. 36(9), pages 3620-3625, September.
    13. Fan, Shu & Hyndman, Rob J., 2011. "The price elasticity of electricity demand in South Australia," Energy Policy, Elsevier, vol. 39(6), pages 3709-3719, June.
    14. Leuthold, Florian & Weigt, Hannes & von Hirschhausen, Christian, 2008. "Efficient pricing for European electricity networks - The theory of nodal pricing applied to feeding-in wind in Germany," Utilities Policy, Elsevier, vol. 16(4), pages 284-291, December.
    15. Sylvestre Gaudin & Ronald C. Griffin & Robin C. Sickles, 2001. "Demand Specification for Municipal Water Management: Evaluation of the Stone-Geary Form," Land Economics, University of Wisconsin Press, vol. 77(3), pages 399-422.
    16. Frank T. Denton & Dean C. Mountain & Byron G. Spencer, 2003. "Energy Demand with Declining Rate Schedules: An Econometric Model for the U.S. Commercial Sector," Land Economics, University of Wisconsin Press, vol. 79(1), pages 86-105.
    17. Ziramba, Emmanuel, 2008. "The demand for residential electricity in South Africa," Energy Policy, Elsevier, vol. 36(9), pages 3460-3466, September.
    18. Asadoorian, Malcolm O. & Eckaus, Richard S. & Schlosser, C. Adam, 2008. "Modeling climate feedbacks to electricity demand: The case of China," Energy Economics, Elsevier, vol. 30(4), pages 1577-1602, July.
    19. 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.
    20. 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.
    21. Lee, Byoung-Hoon & Ahn, Hyeon-Hyo, 2006. "Electricity industry restructuring revisited: the case of Korea," Energy Policy, Elsevier, vol. 34(10), pages 1115-1126, July.
    22. Kim, Jin-Ho & Shcherbakova, Anastasia, 2011. "Common failures of demand response," Energy, Elsevier, vol. 36(2), pages 873-880.
    23. Winkler, Harald & Simões, André Felipe & Rovere, Emilio Lèbre la & Alam, Mozaharul & Rahman, Atiq & Mwakasonda, Stanford, 2011. "Access and Affordability of Electricity in Developing Countries," World Development, Elsevier, vol. 39(6), pages 1037-1050, June.
    24. Dergiades, Theologos & Tsoulfidis, Lefteris, 2008. "Estimating residential demand for electricity in the United States, 1965-2006," Energy Economics, Elsevier, vol. 30(5), pages 2722-2730, September.
    25. Ozturk, Ilhan, 2010. "A literature survey on energy-growth nexus," Energy Policy, Elsevier, vol. 38(1), pages 340-349, January.
    26. Faruqui, Ahmad & George, Stephen, 2005. "Quantifying Customer Response to Dynamic Pricing," The Electricity Journal, Elsevier, vol. 18(4), pages 53-63, May.
    27. Murata, Akinobu & Kondou, Yasuhiko & Hailin, Mu & Weisheng, Zhou, 2008. "Electricity demand in the Chinese urban household-sector," Applied Energy, Elsevier, vol. 85(12), pages 1113-1125, December.
    28. Ek, Kristina & Söderholm, Patrik, 2008. "Households' switching behavior between electricity suppliers in Sweden," Utilities Policy, Elsevier, vol. 16(4), pages 254-261, December.
    29. 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.
    30. Mideksa, Torben K. & Kallbekken, Steffen, 2010. "The impact of climate change on the electricity market: A review," Energy Policy, Elsevier, vol. 38(7), pages 3579-3585, July.
    31. Allcott, Hunt, 2011. "Rethinking real-time electricity pricing," Resource and Energy Economics, Elsevier, vol. 33(4), pages 820-842.
    32. Cappers, Peter & Goldman, Charles & Kathan, David, 2010. "Demand response in U.S. electricity markets: Empirical evidence," Energy, Elsevier, vol. 35(4), pages 1526-1535.
    33. Strbac, Goran, 2008. "Demand side management: Benefits and challenges," Energy Policy, Elsevier, vol. 36(12), pages 4419-4426, December.
    34. 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.
    35. 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.
    36. Orans, Ren & Woo, C.K. & Horii, Brian & Chait, Michele & DeBenedictis, Andrew, 2010. "Electricity Pricing for Conservation and Load Shifting," The Electricity Journal, Elsevier, vol. 23(3), pages 7-14, April.
    37. Anin Aroonruengsawat & Maximilian Auffhammer, 2011. "Impacts of Climate Change on Residential Electricity Consumption: Evidence from Billing Data," NBER Chapters, in: The Economics of Climate Change: Adaptations Past and Present, pages 311-342, National Bureau of Economic Research, Inc.
    38. Spees, Kathleen & Lave, Lester B., 2007. "Demand Response and Electricity Market Efficiency," The Electricity Journal, Elsevier, vol. 20(3), pages 69-85, April.
    39. Tanaka, Makoto, 2006. "Real-time pricing with ramping costs: A new approach to managing a steep change in electricity demand," Energy Policy, Elsevier, vol. 34(18), pages 3634-3643, December.
    40. Yoo, Seung-Hoon & Lee, Joo Suk & Kwak, Seung-Jun, 2007. "Estimation of residential electricity demand function in Seoul by correction for sample selection bias," Energy Policy, Elsevier, vol. 35(11), pages 5702-5707, November.
    41. Louw, Kate & Conradie, Beatrice & Howells, Mark & Dekenah, Marcus, 2008. "Determinants of electricity demand for newly electrified low-income African households," Energy Policy, Elsevier, vol. 36(8), pages 2814-2820, August.
    42. 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.
    43. Herter, Karen, 2007. "Residential implementation of critical-peak pricing of electricity," Energy Policy, Elsevier, vol. 35(4), pages 2121-2130, April.
    44. Ozturk, Ilhan & Acaravci, Ali, 2011. "Electricity consumption and real GDP causality nexus: Evidence from ARDL bounds testing approach for 11 MENA countries," Applied Energy, Elsevier, vol. 88(8), pages 2885-2892, August.
    45. Azzouni, Anees S. & Parmesano, Hethie & Al-Rashed, Saud A., 2008. "Major Electricity Customer Pricing Options: The Case of Saudi Arabia," The Electricity Journal, Elsevier, vol. 21(1), pages 55-69.
    46. Ananth V. Iyer & Vinayak Deshpande & Zhengping Wu, 2003. "A Postponement Model for Demand Management," Management Science, INFORMS, vol. 49(8), pages 983-1002, August.
    47. Payne, James E., 2010. "A survey of the electricity consumption-growth literature," Applied Energy, Elsevier, vol. 87(3), pages 723-731, March.
    48. 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.
    49. John A. Nordin, 1976. "A Proposed Modification of Taylor's Demand Analysis: Comment," Bell Journal of Economics, The RAND Corporation, vol. 7(2), pages 719-721, Autumn.
    50. Lester D. Taylor, 1975. "The Demand for Electricity: A Survey," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 74-110, Spring.
    51. Sheffrin, Anjali & Yoshimura, Henry & LaPlante, David & Neenan, Bernard, 2008. "Harnessing the Power of Demand," The Electricity Journal, Elsevier, vol. 21(2), pages 39-50, March.
    52. Jamil, Faisal & Ahmad, Eatzaz, 2011. "Income and price elasticities of electricity demand: Aggregate and sector-wise analyses," Energy Policy, Elsevier, vol. 39(9), pages 5519-5527, September.
    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. Jean-Claude Berthélemy & Arnaud Millien, 2018. "Impact of Decentralized Electrification Projects on Sustainable Development: A Meta-Analysis," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01922517, HAL.
    2. Heshmati, Almas & Abolhosseini, Shahrouz, 2014. "Market Design for Trading Commoditized Renewable Energy," Working Paper Series in Economics and Institutions of Innovation 372, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    3. Heshmati, Almas, 2015. "A Review of the Circular Economy and its Implementation," IZA Discussion Papers 9611, Institute of Labor Economics (IZA).
    4. Møller, Niels Framroze & Andersen, Laura Mørch & Hansen, Lars Gårn & Jensen, Carsten Lynge, 2019. "Can pecuniary and environmental incentives via SMS messaging make households adjust their electricity demand to a fluctuating production?," Energy Economics, Elsevier, vol. 80(C), pages 1050-1058.
    5. Abolhosseini, Shahrouz & Heshmati, Almas & Altmann, Jörn, 2014. "A Review of Renewable Energy Supply and Energy Efficiency Technologies," IZA Discussion Papers 8145, Institute of Labor Economics (IZA).
    6. Genc, Talat S., 2016. "Measuring demand responses to wholesale electricity prices using market power indices," Energy Economics, Elsevier, vol. 56(C), pages 247-260.
    7. Vallés, Mercedes & Bello, Antonio & Reneses, Javier & Frías, Pablo, 2018. "Probabilistic characterization of electricity consumer responsiveness to economic incentives," Applied Energy, Elsevier, vol. 216(C), pages 296-310.
    8. Junghee Han & Almas Heshmati & Masoomeh Rashidghalam, 2020. "Circular Economy Business Models with a Focus on Servitization," Sustainability, MDPI, vol. 12(21), pages 1-17, October.
    9. Khayyat, Nabaz T. & Heshmati, Almas, 2014. "Production Risk, Energy Use Efficiency and Productivity of Korean Industries," Working Paper Series in Economics and Institutions of Innovation 359, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    10. Heshmati, Almas & Kumbhakar, Subal C. & Sun, Kai, 2014. "Estimation of productivity in Korean electric power plants: A semiparametric smooth coefficient model," Energy Economics, Elsevier, vol. 45(C), pages 491-500.
    11. Almas Heshmati, 2018. "An empirical survey of the ramifications of a green economy," International Journal of Green Economics, Inderscience Enterprises Ltd, vol. 12(1), pages 53-85.
    12. Niels Framroze Møller & Laura Mørch Andersen & Lars Gårn Hansen & Carsten Lynge Jensen, 2018. "Can pecuniary and environmental incentives via SMS messaging make households adjust their intra-day electricity demand to a fluctuating production?," IFRO Working Paper 2018/06, University of Copenhagen, Department of Food and Resource Economics.

    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. Heshmati, Almas, 2012. "Survey of Models on Demand, Customer Base-Line and Demand Response and Their Relationships in the Power Market," IZA Discussion Papers 6637, Institute of Labor Economics (IZA).
    2. 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.
    3. 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.
    4. Jia, Jun-Jun & Guo, Jin & Wei, Chu, 2021. "Elasticities of residential electricity demand in China under increasing-block pricing constraint: New estimation using household survey data," Energy Policy, Elsevier, vol. 156(C).
    5. Hung, Ming-Feng & Huang, Tai-Hsin, 2015. "Dynamic demand for residential electricity in Taiwan under seasonality and increasing-block pricing," Energy Economics, Elsevier, vol. 48(C), pages 168-177.
    6. 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.
    7. Boogen, Nina & Datta, Souvik & Filippini, Massimo, 2021. "Estimating residential electricity demand: New empirical evidence," Energy Policy, Elsevier, vol. 158(C).
    8. Valeria Di Cosmo, Sean Lyons, and Anne Nolan, 2014. "Estimating the Impact of Time-of-Use Pricing on Irish Electricity Demand," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    9. 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).
    10. Makena Coffman & Paul Bernstein & Sherilyn Wee & Aida Arik, 2016. "Estimating the Opportunity for Load-Shifting in Hawaii: An Analysis of Proposed Residential Time-of-Use Rates," Working Papers 2016-10, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    11. Desiderio Romero-Jordán & Pablo del Río & Cristina Peñasco, 2014. "Household electricity demand in Spanish regions. Public policy implications," Working Papers 2014/24, Institut d'Economia de Barcelona (IEB).
    12. He, Yongxiu & Wang, Bing & Wang, Jianhui & Xiong, Wei & Xia, Tian, 2012. "Residential demand response behavior analysis based on Monte Carlo simulation: The case of Yinchuan in China," Energy, Elsevier, vol. 47(1), pages 230-236.
    13. Desiderio Romero-Jordán & Pablo del Río & Cristina Peñasco, 2014. "Household electricity demand in Spanish regions. Public policy implications," Working Papers 2014/24, Institut d'Economia de Barcelona (IEB).
    14. Acuña, Guillermo, 2017. "Elasticidades de la demanda de agua en Chile [Elasticities of water demand in Chile]," MPRA Paper 82916, University Library of Munich, Germany.
    15. René Cabral & Luciano Ayala & Victor Hugo Delgado, 2017. "Residential Water Demand and Price Perception under Increasing Block Rates," Economics Bulletin, AccessEcon, vol. 37(1), pages 508-519.
    16. Fullerton Jr., Thomas M. & Macias, David R. & Walke, Adam G., 2016. "Residential Electricity Demand in El Paso," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 46(2), December.
    17. 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.
    18. 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.
    19. 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.
    20. Alberini, Anna & Filippini, Massimo, 2011. "Response of residential electricity demand to price: The effect of measurement error," Energy Economics, Elsevier, vol. 33(5), pages 889-895, September.

    More about this item

    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:bla:jecsur:v:28:y:2014:i:5:p:862-888. 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: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0950-0804 .

    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.