Estimating the Elasticity to Real-Time Pricing: Evidence from the Spanish Electricity Market

Natalia Fabra, David Rapson, Mar Reguant and Jingyuan Wang

AEA Papers and Proceedings, 2021, vol. 111, 425-29

Abstract: We estimate consumer response to the first large-scale real-time electricity pricing (RTP) program. In 2015, RTP became the default tariff for residential customers in Spain, exposing them to prices that vary hourly based on day-ahead wholesale prices. Using expected national wind production as an instrument for price, we estimate household-level demand elasticities for RTP households and non-RTP (placebo) households. Estimates show no difference in behavior across RTP and non-RTP households. Reasons for nonresponse may include low potential gains or high nonmonetary costs of information acquisition and behavioral change. We discuss implications for optimal dynamic electricity pricing.

JEL-codes: D12 H31 L11 L94 L98 Q41 Q48 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (25)

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DOI: 10.1257/pandp.20211007

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