The Silver Lining of Price Spikes: How Electricity Price Spikes Can Help Overcome the Energy Efficiency Gap

Johannes Mauritzen ()
Additional contact information
Johannes Mauritzen: Norwegian School of Economics, Postal: and IFN

No 1048, Working Paper Series from Research Institute of Industrial Economics

Abstract: Studies have shown that many consumers and businesses fail to invest in energy efficiency improvements despite seemingly ample financial incentives to do so – the so called energy efficiency gap or paradox. Attempts to explain this gap often focus on searching costs, information frictions and behavioral factors. Using data on Norwegian electricity prices and Google searches for heat pumps, I suggest that the inherently spikey nature of many electricity markets has a strong and significant positive effect on searching for information on energy efficiency goods. Because consumers pay for electricity based on at least monthly averages of the wholesale price, I can identify the informational and behavioral effect by decomposing prices into smoothed and deviation components using a novel method of measuring spikiness, comparing the actual price series with a range of deviations from Loess smoothed series.

Keywords: Energy efficiency; Deregulated electricity markets; Price spikes; Informational frictions (search for similar items in EconPapers)
JEL-codes: D12 D83 Q41 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014-11-28
New Economics Papers: this item is included in nep-ene and nep-reg
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.ifn.se/wfiles/wp/wp1048.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:1048

Access Statistics for this paper

More papers in Working Paper Series from Research Institute of Industrial Economics Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Elisabeth Gustafsson ().