Housing Lab in Journal of the Association of Environmental and Resource Economists
Cloé Garnache (Housing Lab), Øystein Hernæs and Anders Gravir Imenes have written the paper Demand-Side Management in Fully Electrified Homes, which will be published in Journal of the Association of Environmental and Resource Economists.
Abstract: We report the results of a critical peak pricing (CPP) experiment conducted in an environment where homes are fully electrified, including both room and water heating. When a CPP with day-ahead SMS announcements is applied to the afternoon peak, creating a ten-fold increase in the electricity price, electricity consumption decreases by 15.3%, virtually eliminating that peak. The largest responses come from electric vehicle (EV) households. Also, unlike households without EVs who make reductions without compensating later, EV households respond to the CPP by shifting load to off-peak and next-day use. In our experiment, where higher-income households are disproportionately likely to own EVs, we find that demand reductions induced by the CPP are similar across income groups. Our results support the view that increased electrification may lead not only to a greater need for demand-side management but also enhance the flexibility in how households can and are willing to respond.