Consumers’ Willingness to Accept Time-of-Use Tariffs for Shifting Electricity Demand

Swantje Sundt, Katrin Rehdanz and Jürgen Meyerhoff
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Swantje Sundt: Department of Economics, Kiel University, Olshausenstraße 40, D-24098 Kiel, Germany

Energies, 2020, vol. 13, issue 8, 1-17

Abstract: Time-of-use (TOU) electricity tariffs represent an instrument for demand side management. By reducing energy demand during peak times, less investments in otherwise necessary, costly, and CO 2 intensive redispatch would be required. We use a choice experiment (CE) to analyze private consumers’ acceptance of TOU tariffs in Germany. In our CE, respondents choose between a fixed rate tariff and two TOU tariffs that differ by peak time scheme and by a control of appliances’ electricity consumption during that time. We use a mixed logit model to account for taste heterogeneity. Moreover, investigating decision strategies, we identify three different strategies that shed light on drivers of unobserved taste heterogeneity: (1) Always choosing the status quo, (2) always choosing the maximum discount, and (3) choosing a TOU tariff but not always going for the maximum discount. Overall, about 70% of our 1398 respondents would choose a TOU tariff and shift their electricity demand, leading to a decline in energy demand during peak times. Rough estimates indicate that this would lead to significant savings in electricity generation, avoiding up to a mid to large-sized fossil-fuel power plant.

Keywords: choice experiment; demand-side-management; time-of-use tariff; willingness to accept; mixed logit; energy transition (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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