Mind the Peak: The Role of Peak Demand Charges and Real-Time Pricing in Residential Electricity Flexibility

Marten Ovaere () and Mark Vergouwen

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: We use high-frequency electricity consumption data from a natural experiment in Flanders to study the interacting effects of real-time electricity pricing, which encourages consumption during periods of low generation cost, and peak demand charges, which discourage simultaneous demand that stresses local grids. Our matched difference-in-differences estimates show that real-time pricing increases household peak demand, while peak demand charges reduce it by 1–3% on average. Reductions are largest among electric vehicle owners, who shift up to 0.75 kWh per day to nighttime hours. These household-level responses result in lower coincident grid-level demand peaks, reducing the need for costly grid reinforcement.

JEL-codes: C23 D12 D91 L94 Q41 Q48 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2025-06
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:25/1115

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