Towards flexible energy demand – Preferences for dynamic contracts, services and emissions reductions

Ruokamo, Enni; Kopsakangas-Savolainen, Maria; Meriläinen, Teemu; Svento, Rauli

doi:10.1016/j.eneco.2019.104522

Cited by 56 publications

(43 citation statements)

References 57 publications

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“…Respondents require a lower overall compensation (WTA is negative) for accepting a control of their washing machine, no compensation for the control of their dishwasher (insignificant) but an additional compensation for the control of their freezer or dryer (WTA is positive). In general, studies outside of Germany (e.g., [12,15]) found that consumers dislike a control of their electricity consumption but these studies do not differentiate between appliances. For Germany, Dütschke and Paetz [17] discovered that households prefer an automated electricity control over a manual one.…”

Section: Estimation Resultsmentioning

confidence: 99%

“…Finally, Ruokamo et al [15] combined in a CE dynamic tariffs with information on CO 2 -emission reductions. Their online-survey is based on responses of about 380 Finnish homeowners.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The few studies [6][7][8][9][10][11][12][13][14][15][16][17][18] investigating the potential effectiveness of TOU tariffs provide evidence that these tariffs reduce consumers' utility. A drawback of the available studies is, however, that either samples are restricted to certain consumer groups or sample sizes are too low to derive general conclusions.…”

Section: Introductionmentioning

confidence: 99%

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Consumers’ Willingness to Accept Time-of-Use Tariffs for Shifting Electricity Demand

2020

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Time-of-use (TOU) electricity tariffs represent an instrument for demand side management. By reducing energy demand during peak times, less investments in otherwise necessary, costly, and CO2 intensive redispatch would be required. We use a choice experiment (CE) to analyze private consumers’ acceptance of TOU tariffs in Germany. In our CE, respondents choose between a fixed rate tariff and two TOU tariffs that differ by peak time scheme and by a control of appliances’ electricity consumption during that time. We use a mixed logit model to account for taste heterogeneity. Moreover, investigating decision strategies, we identify three different strategies that shed light on drivers of unobserved taste heterogeneity: (1) Always choosing the status quo, (2) always choosing the maximum discount, and (3) choosing a TOU tariff but not always going for the maximum discount. Overall, about 70% of our 1398 respondents would choose a TOU tariff and shift their electricity demand, leading to a decline in energy demand during peak times. Rough estimates indicate that this would lead to significant savings in electricity generation, avoiding up to a mid to large-sized fossil-fuel power plant.

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Section: Estimation Resultsmentioning

confidence: 99%

“…Finally, Ruokamo et al [15] combined in a CE dynamic tariffs with information on CO 2 -emission reductions. Their online-survey is based on responses of about 380 Finnish homeowners.…”

Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Consumers’ Willingness to Accept Time-of-Use Tariffs for Shifting Electricity Demand

2020

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“…In this setting, the cost and benefit of volatility and flexibility are not internalized but socialized across all heat pumps. A more innovative tariff design, such as real-time pricing, would be needed to incentivize the choice of system-friendly heat pump systems and the provision of flexibility (Ruokamo et al, 2019). Moreover, retail prices include taxes, levies, and grid charges.…”

Section: Discussion and Limitationsmentioning

confidence: 99%

Heating with wind: Economics of heat pumps and variable renewables

2020

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With the growth of wind and solar energy in electricity supply, the electrification of space heating is becoming a promising decarbonization option. In turn, such electrification may help the power system integration of variable renewables, for two reasons: thermal storage could provide low-cost flexibility and heat demand is seasonally correlated with wind power. However, temporal fluctuations in heat demand may also imply new challenges for the power system. This study assesses the economic characteristics of electric heat pumps and wind energy and studies their interaction on wholesale electricity markets. Using a numerical electricity market model, we estimate the economic value of wind energy and the economic cost of powering heat pumps. We find that, just as expanding wind energy depresses its €/MWhel value, adopting heat pumps increases their €/MWhel cost. This rise can be mitigated by synergistic effects with wind power, "system-friendly" heat pump technology, and thermal storage. Furthermore, heat pumps raise the wind market value, but this effect vanishes if accounting for the additional wind energy needed to serve the heat pump load. Thermal storage facilitates the system integration of wind power but competes with other flexibility options. For an efficient adoption of heat pumps and thermal storage, we argued that retail tariffs for heat pump customers should reflect their underlying economic cost.

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“…For example, a Finnish 30-year bond yield has been below 0.5% since the summer of 2019. Second, households may put weight on other factors related to PV systems, such as emissions reductions (Crago and Chernyakhovskiy, 2017;Ruokamo et al, 2019). To assess this point, we analysed how solar power output reduces households' CO 2 emissions of electricity consumption (see Fig.…”

Section: The Pv Investment Profitability Under Tou and Optimized Hot Water Heating Strategiesmentioning

confidence: 99%

Residential solar power profitability with thermal energy storage and carbon-corrected electricity prices

et al. 2021

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We study the economic profitability of residential solar photovoltaic (PV) systems in Finland. We show a moderate rate of returns (1.0% in Northern and 1.4% in Southern Finland) for the PV system investments with time-of-use hot water heating. Optimized hot water heating increases the rate of return by 0.6 percentage points. We internalize the negative externalities of greenhouse gas emissions from electricity generation by presenting the hourly electricity prices as a function of emission permit costs. A 10 e/tCO 2 increase in carbon price improves the PV investment rate of return by 0.3 percentage points.

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Towards flexible energy demand – Preferences for dynamic contracts, services and emissions reductions

Cited by 56 publications

References 57 publications

Consumers’ Willingness to Accept Time-of-Use Tariffs for Shifting Electricity Demand

Consumers’ Willingness to Accept Time-of-Use Tariffs for Shifting Electricity Demand

Heating with wind: Economics of heat pumps and variable renewables

Residential solar power profitability with thermal energy storage and carbon-corrected electricity prices

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