Hourly demand for electricity in Sweden: Implications for load, welfare and emissions

Amin Karimu, Chandra Kiran B. Krishnamurthy () and Mattias Vesterberg ()
Additional contact information
Amin Karimu: CERE - the Center for Environmental and Resource Economics
Chandra Kiran B. Krishnamurthy: CERE - the Center for Environmental and Resource Economics
Mattias Vesterberg: CERE - the Center for Environmental and Resource Economics

No 2019:4, CERE Working Papers from CERE - the Center for Environmental and Resource Economics

Abstract: In this study, using sub-hourly appliance-level data from a representative sample of Swedish households on standard tariffs, we investigate the welfare and emission implications of moving to a mandatory dynamic pricing scheme. We treat demand during different hours of a day to affect utility differently, and account for the derived nature of electricity demand by explicitly considering the services (end-use demands) that drive hourly electricity demand. We use the flexible EASI demand system, which accommodates both observed and unobserved heterogeneity in preferences, to understand changes in load consequent to moving to dynamic pricing schemes. We find changes in load patterns across hours to be relatively small (with at most a three percent reduction during the morning peak, and a two percent increase in the off-peak times), and welfare and emissions to decrease slightly (a maximum of 0.2 percent and 0.25 percent, respectively). Overall, in the context of a decentralized electricity retail setting such as in Sweden, our results call into question both the desirability (from a short-run welfare perspective) or the feasibility (from a consumer perspective) of the emphasis on ensuring that the retail price of electricity be aligned to the hourly marginal cost.

Keywords: Appliance holdings; Electricity; Energy demand; Demand system; Dynamic pricing (search for similar items in EconPapers)
JEL-codes: C30 D12 Q41 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2019-02-22
New Economics Papers: this item is included in nep-ene and nep-reg
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3340228 Full text (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:slucer:2019_004

Access Statistics for this paper

More papers in CERE Working Papers from CERE - the Center for Environmental and Resource Economics
Bibliographic data for series maintained by Mona Bonta Bergman ().