Investigating Non-Price Factors in Electricity Demand Response: An Applied Economics Study
9 September 2019
Graduation Hall, Grauwzusters Cloister - University of Antwerp, Stadscampus, Lange Sint-Annastraat 7 - 2000 Antwerp (route: UAntwerpen, Stadscampus
Prof. Dr. Steven Van Passel, Dr. Erik Laes
PhD defence Aman Srivastava - Faculty of Business and Economics
Even while the electricity sector is responsible for a large share (25%) of greenhouse gas emissions, the global demand for electricity is expected to keep increasing. While greater generation from renewable sources can ease both these concerns, such generation is variable in pattern, and the peak generation that is used to fill the gaps between electricity demand and supply is particularly costly.
One way to deal with the variabilities and costs of electricity supply is to match demand to it, through electricity demand response programs. These programs use mechanisms such as the time-based pricing of electricity, or restricting appliances usage at peak times, to shift electrical consumption to times when supply is higher and/or inexpensive.
While these programs have been implemented across many countries, particularly in the industrial and commercial sectors, they are less prevalent in the residential sector, and their success in this sector has been uneven, due to the limited flexibility of households. Further, such programs are not commonly used in developing countries, despite their potential for yielding multiple benefits.
This thesis uses a mix of three econometric approaches to explore how the induced flexibility in the electricity demands (a.k.a. responsiveness) of households may be improved. It draws upon historical cases from a number of different countries, and conducts forward-looking survey-based experiments in two of them – Belgium and India – to see how non-price factors such as socio-economic situations, demographic details, and individual attitudes affect the potential for flexibility and how these factors are valued.
Results demonstrate that demand response programs could indeed be successful, if they are designed and implemented carefully. For instance, they are more likely to succeed in urbanized regions with higher rates of economic growth. Some results were found to be common across the different country contexts. Factors such as household income, respondent age and gender, and awareness of the benefits of such programs, for example, influenced responsiveness to such programs across countries. Other results were specific to the local contexts. In particular, customers’ concerns about the privacy of their electricity usage data and their environmental attitudes influenced response in Belgium, while financial loss aversion and concerns about the stability of electricity supply were bigger concerns in India.
The shared and specific results offer lessons for both, international and domestic electricity policymaking and communications strategies, and point to areas for future research.