Using behavioural economic theory in modelling of demand response

Nicholas Good

Applied Energy, 2019, vol. 239, issue C, 107-116

Abstract: Demand response is recognised as a potentially cost-effective means for providing the increasing amounts of flexibility needed in power systems with increasing penetrations of renewables. However, existing techno-economic approaches for flexible power systems modelling do not recognise that demand response, where it affects the comfort of the end-user, is heavily influenced by the biases and preferences of consumers. That is, demand response is modelled under the assumption that end-users are always rational and active economic agents. This has consistently resulted in seemingly inexplicable gaps between modelled and observed results for demand response schemes. Behavioural economics, which applies psychological insights into economic modelling, has been proposed to address this problem.

Keywords: Demand response; Smart districts; Behavioural economics; Smart grid (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (35)

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DOI: 10.1016/j.apenergy.2019.01.158

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