Advanced Search
MyIDEAS: Login to save this paper or follow this series

Short and long-run time-of-use price elasticities in Swiss residential electricity demand

Contents:

Author Info

  • Massimo Filippini

    ()
    (Centre for Energy Policy and Economics (CEPE), Department of Management, Technology and Economics, ETH Zurich and Department of Economics, Università della Svizzera Italiana, Switzerland)

Abstract

This paper presents an empirical analysis on the residential demand for electricity by time-of-day. This analysis has been performed using aggregate data at the city level for 22 Swiss cities for the period 2000 to 2006. For this purpose, we estimated two log-log demand equations for peak and off-peak electricity consumption using a static and a dynamic partial adjustment approach. These demand functions were estimated using several econometric approaches for panel data, for example LSDV, RE for static models and corrected LSDV, and GMM estimators for dynamic models. The attempt of this empirical analysis has been to highlight some of the characteristics of the Swiss residential electricity demand. The estimated short-run own price elasticities are lower than 1, whereas in the long-run these values, as expected, are higher than 1. The estimated short run as well as long run cross-price elasticities are positive. This result shows that peak and off-peak electricity are substitutes. In this context, time differentiated prices should provide an economic incentive to customers so that they can modify consumption patterns by reducing peak demand and shifting electricity consumption from peak to off-peak periods.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cepe.ethz.ch/publications/workingPapers/CEPE_WP76.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CEPE Center for Energy Policy and Economics, ETH Zurich in its series CEPE Working paper series with number 10-76.

as in new window
Length: 21 pages
Date of creation: Jul 2010
Date of revision:
Handle: RePEc:cee:wpcepe:10-76

Contact details of provider:
Postal: ETH-CEPE, Zürichbergstrasse 18, 8032 Zürich
Phone: +41-1-632 06 50
Fax: +41-1-632 16 22
Email:
Web page: http://www.cepe.ethz.ch
More information through EDIRC

Related research

Keywords: residential electricity demand by time-of-use; time-of-use rates; panel data; partial adjustment model;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Herriges, Joseph A. & Baladi, S. & Sweeney, T., 1998. "Residential Response to Voluntary Time-Of-Use Electricity Rates," Staff General Research Papers 1233, Iowa State University, Department of Economics.
  2. Flaig, Gebhard, 1990. "Household production and the short- and long-run demand for electricity," Energy Economics, Elsevier, vol. 12(2), pages 116-121, April.
  3. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  4. Hill, Daniel H, et al, 1983. "Incentive Payments in Time-of-Day Electricity Pricing Experiments: The Arizona Experience," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 59-65, February.
  5. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, 02.
  6. 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 S171-91, Suppl. De.
  7. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
  8. Filippini, Massimo, 1995. "Swiss residential demand for electricity by time-of-use," Resource and Energy Economics, Elsevier, vol. 17(3), pages 281-290, November.
  9. Henley, Andrew & Peirson, John, 1994. "Time-of-use electricity pricing : Evidence from a British experiment," Economics Letters, Elsevier, vol. 45(3), pages 421-426.
  10. Massimo Filippini, 1995. "Swiss Residential Demand for Electricity by Time-of-Use: An Application of the Almost Ideal Demand System," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 27-40.
  11. Lijesen, Mark G., 2007. "The real-time price elasticity of electricity," Energy Economics, Elsevier, vol. 29(2), pages 249-258, March.
  12. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
  13. Mountain, Dean C & Lawson, Evelyn L, 1992. "A Disaggregated Nonhomothetic Modeling of Responsiveness to Residential Time-of-Use Electricity Rates," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(1), pages 181-207, February.
  14. Caves, Douglas W. & Christensen, L. R. & Herriges, Joseph A., 1984. "The Consistency of the Residential Customer Response in Time-Of-Use Electricity Pricing Experiments," Staff General Research Papers 10798, Iowa State University, Department of Economics.
  15. Massimo Filippini, 1999. "Swiss residential demand for electricity," Applied Economics Letters, Taylor & Francis Journals, vol. 6(8), pages 533-538.
  16. Kiviet, Jan F., 1995. "On bias, inconsistency, and efficiency of various estimators in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 68(1), pages 53-78, July.
  17. Baltagi, Badi H. & Bresson, Georges & Pirotte, Alain, 2002. "Comparison of forecast performance for homogeneous, heterogeneous and shrinkage estimators: Some empirical evidence from US electricity and natural-gas consumption," Economics Letters, Elsevier, vol. 76(3), pages 375-382, August.
  18. Caves, Douglas W. & Christensen, Laurits R. & Herriges, Joseph A., 1984. "Consistency of residential customer response in time-of-use electricity pricing experiments," Journal of Econometrics, Elsevier, vol. 26(1-2), pages 179-203.
  19. Baltagi, Badi H & Griffin, James M, 1984. "Short and Long Run Effects in Pooled Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(3), pages 631-45, October.
  20. Faruqui, Ahmad & Malko, J.Robert, 1983. "The residential demand for electricity by time-of-use: A survey of twelve experiments with peak load pricing," Energy, Elsevier, vol. 8(10), pages 781-795.
  21. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
  22. A. Colin Cameron & Pravin K. Trivedi, 2010. "Microeconometrics Using Stata, Revised Edition," Stata Press books, StataCorp LP, number musr, March.
  23. 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.
  24. Faruqui, Ahmad & George, Stephen S., 2002. "The Value of Dynamic Pricing in Mass Markets," The Electricity Journal, Elsevier, vol. 15(6), pages 45-55, July.
  25. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
  26. Halvorsen, Robert, 1975. "Residential Demand for Electric Energy," The Review of Economics and Statistics, MIT Press, vol. 57(1), pages 12-18, February.
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 in new window

Cited by:
  1. 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).
  2. 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.
  3. 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 for the Study of Labor (IZA).
  4. Lim, Kyoung-Min & Lim, Seul-Ye & Yoo, Seung-Hoon, 2014. "Short- and long-run elasticities of electricity demand in the Korean service sector," Energy Policy, Elsevier, vol. 67(C), pages 517-521.
  5. 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).
  6. Blazquez Leticia & Nina Boogen & Massimo Filippini, 2012. "Residential electricity demand for Spain: new empirical evidence using aggregated data," CEPE Working paper series 12-82, CEPE Center for Energy Policy and Economics, ETH Zurich.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cee:wpcepe:10-76. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carlos Ordas).

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.