IDEAS home Printed from https://ideas.repec.org/p/eth/wpswif/16-247.html
   My bibliography  Save this paper

Demand-side management by electric utilities in Switzerland: Analyzing its impact on residential electricity demand

Author

Abstract

In this paper we use panel data from a survey conducted on 30 Swiss utilities to estimate the impact of demand-side management (DSM) activities on residential electricity demand using DSM spending and an energy efficiency score. Using the variation in DSM activities within utilities and across utilities over time we identify the impact of these programs and find that their presence reduce per customer residential electricity consumption by around 5%. If we consider monetary spending, the effect of a 10% increase in DSM spending causes around a 0.14% reduction in per customer residential electricity consumption. The cost of saving a kilowatt hour is around CHF 0.04 while the average cost of producing and distributing electricity in Switzerland is around CHF 0.18 per kilowatt hour. We conclude that current DSM practices in Switzerland have a statistically significant effect on reducing the demand for residential electricity.

Suggested Citation

  • Nina Boogen & Souvik Datta & Massimo Filippini, 2016. "Demand-side management by electric utilities in Switzerland: Analyzing its impact on residential electricity demand," CER-ETH Economics working paper series 16/247, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    • Handle: RePEc:eth:wpswif:16-247
    as

    Download full text from publisher

    File URL: http://www.cer.ethz.ch/content/dam/ethz/special-interest/mtec/cer-eth/cer-eth-dam/documents/working-papers/WP-16-247.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Toshi H. Arimura, Shanjun Li, Richard G. Newell, and Karen Palmer, 2012. "Cost-Effectiveness of Electricity Energy Efficiency Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    2. Joseph Eto & Suzie Kito & Leslie Shown & Richard Sonnenblick, 2000. "Where Did the Money Go? The Cost and Performance of the Largest Commercial Sector DSM Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 23-49.
    3. Nadel, Steven & Geller, Howard, 1996. "Utility DSM : What have we learned? Where are we going?," Energy Policy, Elsevier, vol. 24(4), pages 289-302, April.
    4. Paul W. Parfomak & Lester B. Lave, 1996. "How Many Kilowatts are in a Negawatt? Verifying Ex Post Estimates of Utility Conservation Impacts at the Regional Level," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 59-87.
    5. Heckman, James J, 1978. "Dummy Endogenous Variables in a Simultaneous Equation System," Econometrica, Econometric Society, vol. 46(4), pages 931-959, July.
    6. Shin, Jeong-Shik, 1985. "Perception of Price When Price Information Is Costly: Evidence from Residential Electricity Demand," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 591-598, November.
    7. Lee, Lung-Fei, 1979. "Identification and Estimation in Binary Choice Models with Limited (Censored) Dependent Variables," Econometrica, Econometric Society, vol. 47(4), pages 977-996, July.
    8. Amemiya, Takeshi, 1978. "The Estimation of a Simultaneous Equation Generalized Probit Model," Econometrica, Econometric Society, vol. 46(5), pages 1193-1205, September.
    9. Berry, David, 2008. "The impact of energy efficiency programs on the growth of electricity sales," Energy Policy, Elsevier, vol. 36(9), pages 3620-3625, September.
    10. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    11. Marvin J. Horowitz, 2007. "Changes in Electricity Demand in the United States from the 1970s to 2003," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 93-120.
    12. David S. Loughran and Jonathan Kulick, 2004. "Demand-Side Management and Energy Efficiency in the United States," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 19-44.
    13. Paul L. Joskow & Donald B. Marron, 1992. "What Does a Negawatt Really Cost? Evidence from Utility Conservation Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 41-74.
    14. Dulleck, Uwe & Kaufmann, Sylvia, 2004. "Do customer information programs reduce household electricity demand?--the Irish program," Energy Policy, Elsevier, vol. 32(8), pages 1025-1032, June.
    15. Koichiro Ito, 2014. "Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing," American Economic Review, American Economic Association, vol. 104(2), pages 537-563, February.
    16. Nic Rivers & Mark Jaccard, 2011. "Electric Utility Demand Side Management in Canada," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 93-116.
    17. Maximilian Auffhammer & Carl Blumstein & Meredith Fowlie, 2008. "Demand-Side Management and Energy Efficiency Revisited," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 91-104.
    18. Joseph Eto & Edward Vine & Leslie Shown & Richard Sonnenblick & Chris Payne, 1996. "The Total Cost and Measured Performance of Utility-Sponsored Energy Efficiency Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 31-51.
    19. Kiviet, Jan F., 1995. "On bias, inconsistency, and efficiency of various estimators in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 68(1), pages 53-78, July.
    20. Sanya Carley, 2012. "Energy demand‐side management: New perspectives for a new era," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 31(1), pages 6-32, December.
    21. Marvin J. Horowitz, 2004. "Electricity Intensity in the Commercial Sector: Market and Public Program Effects," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 115-138.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hyun, Minwoo & Kim, Yeong Jae & Eom, Jiyong, 2020. "Assessing the impact of a demand-resource bidding market on an electricity generation portfolio and the environment," Energy Policy, Elsevier, vol. 147(C).
    2. Terlouw, Tom & AlSkaif, Tarek & Bauer, Christian & van Sark, Wilfried, 2019. "Optimal energy management in all-electric residential energy systems with heat and electricity storage," Applied Energy, Elsevier, vol. 254(C).
    3. Wang, Yuanping & Hou, Lingchun & Cai, Weiguang & Zhou, Zhaoyin & Bian, Jing, 2023. "Exploring the drivers and influencing mechanisms of urban household electricity consumption in China - Based on longitudinal data at the provincial level," Energy, Elsevier, vol. 273(C).
    4. Terlouw, Tom & AlSkaif, Tarek & Bauer, Christian & van Sark, Wilfried, 2019. "Multi-objective optimization of energy arbitrage in community energy storage systems using different battery technologies," Applied Energy, Elsevier, vol. 239(C), pages 356-372.
    5. Jerzy Andruszkiewicz & Józef Lorenc & Agnieszka Weychan, 2019. "Demand Price Elasticity of Residential Electricity Consumers with Zonal Tariff Settlement Based on Their Load Profiles," Energies, MDPI, vol. 12(22), pages 1-22, November.
    6. Kang, Jieyi & Reiner, David M., 2022. "What is the effect of weather on household electricity consumption? Empirical evidence from Ireland," Energy Economics, Elsevier, vol. 111(C).
    7. Yuanping Wang & Weiguang Cai & Lingchun Hou & Zhaoyin Zhou & Jing Bian, 2022. "Examining the Provincial-Level Difference and Impact Factors of Urban Household Electricity Consumption in China—Based on the Extended STIRPAT Model," Sustainability, MDPI, vol. 14(16), pages 1-18, August.
    8. Daiva Stanelyte & Neringa Radziukyniene & Virginijus Radziukynas, 2022. "Overview of Demand-Response Services: A Review," Energies, MDPI, vol. 15(5), pages 1-31, February.
    9. Perrier, Quentin, 2018. "The second French nuclear bet," Energy Economics, Elsevier, vol. 74(C), pages 858-877.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Toshi H. Arimura, Shanjun Li, Richard G. Newell, and Karen Palmer, 2012. "Cost-Effectiveness of Electricity Energy Efficiency Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    2. Horowitz, Marvin J. & Bertoldi, Paolo, 2015. "A harmonized calculation model for transforming EU bottom-up energy efficiency indicators into empirical estimates of policy impacts," Energy Economics, Elsevier, vol. 51(C), pages 135-148.
    3. Datta, Souvik, 2019. "Decoupling and demand-side management: Evidence from the US electric industry," Energy Policy, Elsevier, vol. 132(C), pages 175-184.
    4. Papineau, Maya, 2017. "Setting the standard? A framework for evaluating the cost-effectiveness of building energy standards," Energy Economics, Elsevier, vol. 64(C), pages 63-76.
    5. Kenneth Gillingham & Karen Palmer, 2014. "Bridging the Energy Efficiency Gap: Policy Insights from Economic Theory and Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(1), pages 18-38, January.
    6. Wilson, Elizabeth J. & Plummer, Joseph & Fischlein, Miriam & Smith, Timothy M., 2008. "Implementing energy efficiency: Challenges and opportunities for rural electric co-operatives and small municipal utilities," Energy Policy, Elsevier, vol. 36(9), pages 3383-3397, September.
    7. Alberini, Anna & Towe, Charles, 2015. "Information v. energy efficiency incentives: Evidence from residential electricity consumption in Maryland," Energy Economics, Elsevier, vol. 52(S1), pages 30-40.
    8. Gans, Will & Alberini, Anna & Longo, Alberto, 2013. "Smart meter devices and the effect of feedback on residential electricity consumption: Evidence from a natural experiment in Northern Ireland," Energy Economics, Elsevier, vol. 36(C), pages 729-743.
    9. van Megen, Bram & Bürer, Meinrad & Patel, Martin K., 2019. "Comparing electricity consumption trends: A multilevel index decomposition analysis of the Genevan and Swiss economy," Energy Economics, Elsevier, vol. 83(C), pages 1-25.
    10. Chong, Howard, 2012. "Building vintage and electricity use: Old homes use less electricity in hot weather," European Economic Review, Elsevier, vol. 56(5), pages 906-930.
    11. Frondel, Manuel & Schmidt, Christoph M., 2005. "Evaluating environmental programs: The perspective of modern evaluation research," Ecological Economics, Elsevier, vol. 55(4), pages 515-526, December.
    12. Gillingham, Kenneth & Newell, Richard G. & Palmer, Karen L., 2004. "Retrospective Examination of Demand-Side Energy Efficiency Policies," Discussion Papers 10477, Resources for the Future.
    13. Boomhower, Judson & Davis, Lucas W., 2014. "A credible approach for measuring inframarginal participation in energy efficiency programs," Journal of Public Economics, Elsevier, vol. 113(C), pages 67-79.
    14. Maya M. Papineau, 2015. "Setting the Standard: Commercial Electricity Consumption Responses to Energy Codes," Carleton Economic Papers 15-04, Carleton University, Department of Economics.
    15. Jackson, Jerry, 2010. "Improving energy efficiency and smart grid program analysis with agent-based end-use forecasting models," Energy Policy, Elsevier, vol. 38(7), pages 3771-3780, July.
    16. Stojanovski, Ognen & Leslie, Gordon W. & Wolak, Frank A. & Huerta Wong, Juan Enrique & Thurber, Mark C., 2020. "Increasing the energy cognizance of electricity consumers in Mexico: Results from a field experiment," Journal of Environmental Economics and Management, Elsevier, vol. 102(C).
    17. Diffney, Seán & Lyons, Seán & Malaguzzi Valeri, Laura, 2013. "Evaluation of the effect of the Power of One campaign on natural gas consumption," Energy Policy, Elsevier, vol. 62(C), pages 978-988.
    18. Pedro Linares & Xavier Labandeira, 2010. "Energy Efficiency: Economics And Policy," Journal of Economic Surveys, Wiley Blackwell, vol. 24(3), pages 573-592, July.
    19. Jenya Kahn-Lang, 2016. "The Effects of Electric Utility Decoupling on Energy Efficiency," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    20. Manuel Denzer, 2019. "Estimating Causal Effects in Binary Response Models with Binary Endogenous Explanatory Variables - A Comparison of Possible Estimators," Working Papers 1916, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.

    More about this item

    Keywords

    Residential electricity; demand-side management; energy efficiency score; difference-in-differences; Switzerland;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eth:wpswif:16-247. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/iwethch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.