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Impacts of Responsive Load in PJM: Load Shifting and Real Time Pricing

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  • Kathleen Spees
  • Lester Lave

Abstract

In PJM, 15% of electric generation capacity ran less than 96 hours, 1.1% of the time, over 2006. If retail prices reflected hourly wholesale market prices, customers would shift consumption away from peak hours and installed capacity could drop. We use PJM data to estimate consumer and producer savings from a change toward real-time pricing (RTP) or time-of-use (TOU) pricing. Surprisingly, neither RTP nor TOU has much effect on average price under plausible short-term consumer responses. Consumer plus producer surplus rises 2.8%-4.4% with RTP and 0.6%-1.0% with TOU. Peak capacity savings are seven times larger with RTP. Peak load drops by 10.4%-17.7% with RTP and only 1.1%-2.4% with TOU. Half of all possible customer savings from load shifting are obtained by shifting only 1.7% of all MWh to another time of day, indicating that only the largest customers need be responsive to get the majority of the short-run savings.

Suggested Citation

  • Kathleen Spees & Lester Lave, 2008. "Impacts of Responsive Load in PJM: Load Shifting and Real Time Pricing," The Energy Journal, , vol. 29(2), pages 101-122, April.
    • Handle: RePEc:sae:enejou:v:29:y:2008:i:2:p:101-122
    DOI: 10.5547/ISSN0195-6574-EJ-Vol29-No2-6
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    Cited by:

    1. Hagspiel, Verena & Kort, Peter M. & Wen, Xingang, 2025. "Green technology investment: Announced vs. unannounced subsidy retraction," Journal of Economic Dynamics and Control, Elsevier, vol. 170(C).
    2. Jang, Heesun & Moon, Seongman & Kim, Jihyo, 2024. "Effects of time-of-use pricing for residential customers and wholesale market consequences in South Korea," Energy Economics, Elsevier, vol. 134(C).
    3. Cabot, Clément & Villavicencio, Manuel, 2024. "The demand-side flexibility in liberalised power market: A review of current market design and objectives," Renewable and Sustainable Energy Reviews, Elsevier, vol. 201(C).
    4. Lu, Yucun & Gorrasi, Chiara & Meus, Jelle & Bruninx, Kenneth & Delarue, Erik, 2024. "System-wide benefits of temporal alignment of wholesale–retail electricity prices," Applied Energy, Elsevier, vol. 373(C).

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