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The Potential for Segmentation of the Retail Market for Electricity in Ireland

Author

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  • Hyland, Marie
  • Leahy, Eimear
  • Tol, Richard S. J.

Abstract

We estimate the gross margin that is earned from the supply of electricity to households in Ireland. Using half hourly electricity demand data, the system marginal price (also called the wholesale price) and the retail price of electricity, we analyse how the gross margin varies across customers with different characteristics. The wholesale price varies throughout the day, thus, the time at which electricity is used affects the gross margin. The main factor in determining gross margin, however, is demand. The highest gross margins are earned from supplying customers that have the following characteristics: being aged between 46 and 55, having a household income of at least ?75,000 per annum, being self?employed, having a third level education, having a professional or managerial occupation, living in a household with 7 or more people, living in a detached house, having at least 5 bedrooms or being a mortgage holder. An OLS regression shows that gross margin is partly explained by the energy conservation measures which are present in a household, the number of household members, the number of bedrooms, income, age, occupation and accommodation type.

Suggested Citation

  • Hyland, Marie & Leahy, Eimear & Tol, Richard S. J., 2012. "The Potential for Segmentation of the Retail Market for Electricity in Ireland," Papers WP433, Economic and Social Research Institute (ESRI).
  • Handle: RePEc:esr:wpaper:wp433
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    References listed on IDEAS

    as
    1. Leahy, Eimear & Lyons, Sean, 2010. "Energy use and appliance ownership in Ireland," Energy Policy, Elsevier, vol. 38(8), pages 4265-4279, August.
    2. Paul Joskow & Jean Tirole, 2006. "Retail electricity competition," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 799-815, December.
    3. Vine, Edward & Hamrin, Jan & Eyre, Nick & Crossley, David & Maloney, Michelle & Watt, Greg, 2003. "Public policy analysis of energy efficiency and load management in changing electricity businesses," Energy Policy, Elsevier, vol. 31(5), pages 405-430, April.
    4. repec:rje:randje:v:37:y:2006:i:4:p:799-815 is not listed on IDEAS
    5. O'Doherty, Joe & Lyons, Sean & Tol, Richard S.J., 2008. "Energy-using appliances and energy-saving features: Determinants of ownership in Ireland," Applied Energy, Elsevier, vol. 85(7), pages 650-662, July.
    6. Druckman, A. & Jackson, T., 2008. "Household energy consumption in the UK: A highly geographically and socio-economically disaggregated model," Energy Policy, Elsevier, vol. 36(8), pages 3167-3182, August.
    7. Monica Giulietti & Catherine Waddams Price & Michael Waterson, 2005. "Consumer Choice and Competition Policy: a Study of UK Energy Markets," Economic Journal, Royal Economic Society, vol. 115(506), pages 949-968, October.
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    Cited by:

    1. Dutta, Goutam & Mitra, Krishnendranath, 2015. "Dynamic Pricing of Electricity: A Survey of Related Research," IIMA Working Papers WP2015-08-03, Indian Institute of Management Ahmedabad, Research and Publication Department.
    2. repec:pal:jorsoc:v:68:y:2017:i:10:d:10.1057_s41274-016-0149-4 is not listed on IDEAS
    3. Mulder, M. & Willems, Bert, 2016. "Competition in Retail Electricity Markets : An Assessment of Ten Years Dutch Experience," Discussion Paper 2016-011, Tilburg University, Tilburg Law and Economic Center.

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    Keywords

    data/education/electricity/Ireland/regression;

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