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Real-time pricing when some consumers resist in saving electricity

Author

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  • Evens Salies

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

Successful real-time electricity pricing depends firstly upon consumers' willingness to subscribe to such terms and, secondly, on their ability to curb consumption levels. The present paper addresses both issues by considering consumers differentiated by their electricity saving costs, half of whom resist saving electricity. We demonstrate that when consumers are free to adopt real-time prices, producers prefer charging inefficient prices and, in so doing, discriminate against that portion of the consumer population which faces no saving costs. We also find that efficient marginal cost pricing is feasible, but is incompatible with mass adoption of real-time prices.

Suggested Citation

  • Evens Salies, 2013. "Real-time pricing when some consumers resist in saving electricity," Sciences Po Economics Publications (main) hal-02314751, HAL.
    • Handle: RePEc:hal:spmain:hal-02314751
    DOI: 10.1016/j.enpol.2019.06.009
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-02314751
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    Cited by:

    1. Hobman, Elizabeth V. & Frederiks, Elisha R. & Stenner, Karen & Meikle, Sarah, 2016. "Uptake and usage of cost-reflective electricity pricing: Insights from psychology and behavioural economics," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 455-467.
    2. Fang, Debin & Wang, Pengyu, 2023. "Optimal real-time pricing and electricity package by retail electric providers based on social learning," Energy Economics, Elsevier, vol. 117(C).
    3. Dong, Jun & Jiang, Yuzheng & Liu, Dongran & Dou, Xihao & Liu, Yao & Peng, Shicheng, 2022. "Promoting dynamic pricing implementation considering policy incentives and electricity retailers’ behaviors: An evolutionary game model based on prospect theory," Energy Policy, Elsevier, vol. 167(C).
    4. Pretto, Madeline, 2021. "Tail-risk Comprehension and Protection in Real-time Electricity Pricing : Experimental Evidence," Warwick-Monash Economics Student Papers 25, Warwick Monash Economics Student Papers.
    5. Evens Salies & Julia Bok, 2018. "Digital transformation of the energy sector [Transformation numérique du secteur de l'énergie]," Sciences Po Economics Publications (main) hal-04863553, HAL.
    6. Chmielewski, Adrian & Gumiński, Robert & Mączak, Jędrzej & Radkowski, Stanisław & Szulim, Przemysław, 2016. "Aspects of balanced development of RES and distributed micro-cogeneration use in Poland: Case study of a µCHP with Stirling engine," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 930-952.
    7. Schleich, Joachim & Klobasa, Marian & Gölz, Sebastian & Brunner, Marc, 2013. "Effects of feedback on residential electricity demand—Findings from a field trial in Austria," Energy Policy, Elsevier, vol. 61(C), pages 1097-1106.
    8. Layer, Patrick & Feurer, Sven & Jochem, Patrick, 2017. "Perceived price complexity of dynamic energy tariffs: An investigation of antecedents and consequences," Energy Policy, Elsevier, vol. 106(C), pages 244-254.
    9. Julien Ancel, 2025. "Tariffs time-dynamics in competitive electricity retail markets with differentiated consumer reactions," Post-Print hal-05100663, HAL.
    10. Gambardella, Christian & Pahle, Michael, 2018. "Time-varying electricity pricing and consumer heterogeneity: Welfare and distributional effects with variable renewable supply," Energy Economics, Elsevier, vol. 76(C), pages 257-273.
    11. Anette Boom & Sebastian Schwenen, 2021. "Is real-time pricing smart for consumers?," Journal of Regulatory Economics, Springer, vol. 60(2), pages 193-213, December.
    12. Ancel, Julien, 2025. "Tariffs time-dynamics in competitive electricity retail markets with differentiated consumer reactions," Energy Economics, Elsevier, vol. 148(C).
    13. Olkkonen, Ville & Rinne, Samuli & Hast, Aira & Syri, Sanna, 2017. "Benefits of DSM measures in the future Finnish energy system," Energy, Elsevier, vol. 137(C), pages 729-738.
    14. repec:spo:wpmain:info:hdl:2441/60sgjahunh9dkqd8c1s048perp is not listed on IDEAS
    15. Cl'emence Alasseur & Ivar Ekeland & Romuald Elie & Nicol'as Hern'andez Santib'a~nez & Dylan Possamai, 2017. "An adverse selection approach to power pricing," Papers 1706.01934, arXiv.org, revised Sep 2019.
    16. Silva, Hendrigo Batista da & Santiago, Leonardo P., 2018. "On the trade-off between real-time pricing and the social acceptability costs of demand response," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 1513-1521.

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