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Price response in residential electricity demand: Evidence from Danish smart meter data

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  • Andersen, Per
  • Dietrich, Alexander M.

Abstract

Does residential electricity demand respond to prices? Using a large, high-frequency smart meter dataset from Denmark combined with hourly prices, we estimate the short-run, hourly price elasticity of electricity demand at the household level. Although most households show no significant responsiveness to price signals, we find that nearly one third reduce their consumption significantly when prices rise. On average, a one Danish krone increase in electricity prices leads to a 2.6% decrease in demand. By linking smart meter data to administrative records, we further examine how price responsiveness varies across socio-demographic groups. We find that the price sensitivity is higher among households with higher educational attainment and overall electricity consumption, but lower among those aged 35 to 54.

Suggested Citation

  • Andersen, Per & Dietrich, Alexander M., 2026. "Price response in residential electricity demand: Evidence from Danish smart meter data," Energy Economics, Elsevier, vol. 153(C).
    • Handle: RePEc:eee:eneeco:v:153:y:2026:i:c:s014098832500917x
    DOI: 10.1016/j.eneco.2025.109087
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    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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