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The effect of utility time-varying pricing and load control strategies on residential summer peak electricity use: A review

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  • Newsham, Guy R.
  • Bowker, Brent G.

Abstract

Peak demand for electricity in North America is expected to grow, challenging electrical utilities to supply this demand in a cost-effective, reliable manner. Therefore, there is growing interest in strategies to reduce peak demand by eliminating electricity use, or shifting it to non-peak times. This strategy is commonly called "demand response". In households, common strategies are time-varying pricing, which charge more for energy use on peak, or direct load control, which allows utilities to curtail certain loads during high demand periods. We reviewed recent North American studies of these strategies. The data suggest that the most effective strategy is a critical peak price (CPP) program with enabling technology to automatically curtail loads on event days. There is little evidence that this causes substantial hardship for occupants, particularly if they have input into which loads are controlled and how, and have an override option. In such cases, a peak load reduction of at least 30% is a reasonable expectation. It might be possible to attain such load reductions without enabling technology by focusing on household types more likely to respond, and providing them with excellent support. A simple time-of-use (TOU) program can only expect to realise on-peak reductions of 5%.

Suggested Citation

  • Newsham, Guy R. & Bowker, Brent G., 2010. "The effect of utility time-varying pricing and load control strategies on residential summer peak electricity use: A review," Energy Policy, Elsevier, vol. 38(7), pages 3289-3296, July.
  • Handle: RePEc:eee:enepol:v:38:y:2010:i:7:p:3289-3296
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    References listed on IDEAS

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    1. Heberlein, Thomas A. & Warriner, G. Keith, 1983. "The influence of price and attitude on shifting residential electricity consumption from on- to off-peak periods," Journal of Economic Psychology, Elsevier, vol. 4(1-2), pages 107-130, October.
    2. Rosenzweig, Michael B. & Fraser, Hamish & Falk, Jonathan & Voll, Sarah P., 2003. "Market Power and Demand Responsiveness: Letting Customers Protect Themselves," The Electricity Journal, Elsevier, vol. 16(4), pages 11-23, May.
    3. Herter, Karen, 2007. "Residential implementation of critical-peak pricing of electricity," Energy Policy, Elsevier, vol. 35(4), pages 2121-2130, April.
    4. Ericson, Torgeir, 2009. "Direct load control of residential water heaters," Energy Policy, Elsevier, vol. 37(9), pages 3502-3512, September.
    5. Hartway, Rob & Price, Snuller & Woo, C.K, 1999. "Smart meter, customer choice and profitable time-of-use rate option," Energy, Elsevier, vol. 24(10), pages 895-903.
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    Keywords

    Demand response Load shedding;

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