An Analysis of a Demand Charge Electricity Grid Tariff in the Residential Sector
AbstractThis paper analyses the demand response from residential electricity consumers to a demand charge grid tariff. The tariff charges the maximum hourly peak consumption in each of the winter months January, February and December, thus giving incentives to reduce peak consumption. We use hourly electricity consumption data from 443 households, as well as data on their network and power prices, the local temperature, wind speed and hours of daylight. The panel data set is analysed with a fixed effects regression model. The estimates indicate a demand reduction between 0.07 and 0.27 kWh/h in response to the tariff. This is on average a 5 percent reduction, with a maximum reduction of 9 percent in hour 8. The consumers did not receive any information on their continuous consumption or any reminders when the tariff was in effect. It is likely that the consumption reductions would have been even higher with more information to the consumers.
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Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 574.
Date of creation: Jan 2009
Date of revision:
Electricity consumption; demand charge tariff; demand response;
Find related papers by JEL classification:
- D10 - Microeconomics - - Household Behavior - - - General
- Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-24 (All new papers)
- NEP-ENE-2009-01-24 (Energy Economics)
- NEP-URE-2009-01-24 (Urban & Real Estate Economics)
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