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Short and long-run time-of-use price elasticities in Swiss residential electricity demand

  • Massimo Filippini

    ()

    (Centre for Energy Policy and Economics (CEPE), Department of Management, Technology and Economics, ETH Zurich and Department of Economics, Università della Svizzera Italiana, Switzerland)

This paper presents an empirical analysis on the residential demand for electricity by time-of-day. This analysis has been performed using aggregate data at the city level for 22 Swiss cities for the period 2000 to 2006. For this purpose, we estimated two log-log demand equations for peak and off-peak electricity consumption using a static and a dynamic partial adjustment approach. These demand functions were estimated using several econometric approaches for panel data, for example LSDV, RE for static models and corrected LSDV, and GMM estimators for dynamic models. The attempt of this empirical analysis has been to highlight some of the characteristics of the Swiss residential electricity demand. The estimated short-run own price elasticities are lower than 1, whereas in the long-run these values, as expected, are higher than 1. The estimated short run as well as long run cross-price elasticities are positive. This result shows that peak and off-peak electricity are substitutes. In this context, time differentiated prices should provide an economic incentive to customers so that they can modify consumption patterns by reducing peak demand and shifting electricity consumption from peak to off-peak periods.

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File URL: http://www.cepe.ethz.ch/publications/workingPapers/CEPE_WP76.pdf
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Paper provided by CEPE Center for Energy Policy and Economics, ETH Zurich in its series CEPE Working paper series with number 10-76.

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Length: 21 pages
Date of creation: Jul 2010
Date of revision:
Handle: RePEc:cee:wpcepe:10-76
Contact details of provider: Postal: ETH-CEPE, Zürichbergstrasse 18, 8032 Zürich
Phone: +41-1-632 06 50
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Web page: http://www.cepe.ethz.ch
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