Going Beyond Tradition: Estimating Residential Electricity Demand Using an Appliance Index and Energy Services

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Università della Svizzera italiana Terms of use: Documents in July, 2014AbstractIn this paper we estimate the long-and short-run price elasticities of residential electricity consumption in Switzerland from a household survey by constructing an index of the stock of household appliances as well as by using energy services. We create the index by aggregating the information on the major household appliances. The index is used to estimate the impact of appliances on residential electricity demand. Furthermore, we also use energy services to estimate the electricity demand. We adopt an instrumental variables approach to obtain consistent estimates of the price elasticity to account for potential endogeneity concerns with the average price as well as the appliance index. Our results suggest that the price elasticity is around -0.6. We conclude that Swiss households are price inelastic in electricity prices. This can be used for policy makers as well as by utility companies to design pricing instruments to modify electricity consumption. We also find that estimates of the electricity demand when we substitute the usual residential characteristics with energy services are quite comparable.Keywords: Residential electricity, appliance stock index, energy services, instrumental variables. JEL Classification Codes: D, D1, Q, Q4, Q5. * We are grateful to the Bundesamt für Energie (Swiss Federal Office of Energy) for financial support. We would also like to thank the Verband der Schweizerischen Elektrizitätsunternehmen for providing us with the household survey data. Furthermore, we would like to thank Jürg Nipkow from the Schweizerische Agentur für Energie Effizienz and Stefan Rüesch from Comparis.ch AG for providing us with additional data. We would like to thank seminar participants at

Demand Price Elasticity of Residential Electricity Consumers with Zonal Tariff Settlement Based on Their Load Profiles

“…Thus, unit prices are not constant for customers having different annual energy consumptions, but slightly decrease with increasing energy consumed to a limit equal to the sum of variable rates at very high energy consumption. The simple relationship (13), used to demonstrate the introduced methodology of elasticity calculation, can be transformed into more complex one after substituting cost of energy usage P G11 and P avG12 with their formulas containing fixed tariff rates O PG11 and O PG12 and variable tariff rates P vG11 , P vpG12 , and P voG12 in (13) in order to illustrate their influence on elasticity. The elasticity values thus change along with the change in the consumer's annual energy consumption according to the following equation:…”

“…Table 3. Results of the particular calculation procedure steps and final results of the average annual price elasticity of demand calculations for 2016 and 2017. into more complex one after substituting cost of energy usage PG11 and PavG12 with their formulas containing fixed tariff rates OPG11 and OPG12 and variable tariff rates PvG11, PvpG12, and PvoG12 in (13) in order to illustrate their influence on elasticity. The elasticity values thus change along with the change in the consumer's annual energy consumption according to the following equation:…”

Diffusion of Electricity Consumption Practices in Mexico

“…He founds a close relationship between holding of appliances and electricity demand. Boogen et al (2014) consider energy services and appliances in their analysis of electricity consumption using household survey data from Switzerland (2005 and. They found a positive association between the appliance index and power demand, net of other demographic and economic characteristics.…”

Sensitivity of Price Elasticity of Demand to Aggregation, Unobserved Heterogeneity, Price Trends, and Price Endogeneity: Evidence from U.S. Data

“…Based on Table 1, it would seem that in recent years sample sizes have grown as a result of longer time series and wider cross sections, and data have been more available at more disaggregated levels such as the state (Paul et al, 2009;Alberini and Filippini, 2010), census block group (Borenstein, 2009), or household (Boogen et al, 2014;Fell et al, 2014;Alberini et 8 al., 2011). In the absence of true panels, Bernard et al (2011) construct a pseudo-panel using four waves of survey data from Quebec that results in only 108 observations.…”

“…review a number of studies, and suggest that differences might be due to the sample period, the nature of the data-such as panels (Maddala et al, 1997;Metcalf and Hasset, 1999;Garcia-Cerrutti, 2000;Bernstein and Griffin, 2005; v. pseudo-panels (Bernard et al, 2011), cross-sections (Nesbakken, 1999;Krishnamurthy and Kriström, 2013;Quigley and Rubinfeld, 1989;Boogen et al, 2014;Reiss and White, 2005;Gans et al, 2013), or time series (Kamerschen andPorter, 2004, or Dergiades andTsoulfidis, 2008)-geography, and level of aggregation of the data. In more recent studies, the price elasticity of electricity consumption ranges from as low as -0.06 (Blazquez et al, 2013) to as high as -1.25 (Krishnamurthy and Kriström, 2013).…”