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Towards flexible energy demand – Preferences for dynamic contracts, services and emissions reductions

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  • Ruokamo, Enni
  • Kopsakangas-Savolainen, Maria
  • Meriläinen, Teemu
  • Svento, Rauli

Abstract

Households’ preferences for attributes of flexible energy demand are not well understood. This paper evaluates Finnish households’ acceptance of hypothetical contracts and services aimed at increasing demand side flexibility. We conduct a Choice Experiment to analyze households’ willingness to offer flexibility through timing their electricity usage and heating; their interest in dynamic pricing contracts such as real-time pricing, two-rate tariffs, or power-based tariffs; and how emissions reductions affect their choices. The results indicate that households’ sensitivity to restrictions in electricity usage is much stronger than their sensitivity to restrictions in heating. Households also require considerable compensation to choose real-time pricing over fixed fees. Furthermore, other value-creating elements besides monetary compensation could incentivize households to offer demand side flexibility because they value reductions in CO2 emissions at the power system level.

Suggested Citation

  • Ruokamo, Enni & Kopsakangas-Savolainen, Maria & Meriläinen, Teemu & Svento, Rauli, 2019. "Towards flexible energy demand – Preferences for dynamic contracts, services and emissions reductions," Energy Economics, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:eneeco:v:84:y:2019:i:c:s0140988319303111
    DOI: 10.1016/j.eneco.2019.104522
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    More about this item

    Keywords

    Choice experiment; Consumer; Demand response; Demand side management; Direct load control; Electricity; Power-based tariff; Real-time price; Two-rate tariff; Willingness to pay;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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