Pricing policies for efficient demand side management in liberalized electricity markets

International experience has shown that electricity consumers react to pricing policies by switching retailers or shifting part of their consumption from peak to off-peak hours. This behavior has a direct effect on the competition between retailers. In the light of this evidence (and considering the...

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Autores: Ciarreta Antuñano, Aitor, Espinosa Alejos, María Paz, Pizarro Irizar, María Cristina
Tipo de recurso: artículo
Fecha de publicación:2023
País:España
Institución:Universidad del País Vasco
Repositorio:Addi. Archivo Digital para la Docencia y la Investigación
OAI Identifier:oai:addi.ehu.eus:10810/61401
Acceso en línea:http://hdl.handle.net/10810/61401
Access Level:acceso abierto
Palabra clave:Demand-side management
Electricity market
Retail pricing policies
Switching costs
Time-of-use pricing
Welfare gains
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spelling Pricing policies for efficient demand side management in liberalized electricity marketsCiarreta Antuñano, AitorEspinosa Alejos, María PazPizarro Irizar, María CristinaDemand-side managementElectricity marketRetail pricing policiesSwitching costsTime-of-use pricingWelfare gainsInternational experience has shown that electricity consumers react to pricing policies by switching retailers or shifting part of their consumption from peak to off-peak hours. This behavior has a direct effect on the competition between retailers. In the light of this evidence (and considering the increasing penetration of smart meters) this study presents a theoretical framework in which retailers compete on time-of-use (ToU) pricing. In this case, the model is calibrated with Spanish data. Our objective is to determine whether the ToU pricing that emerges from the retail competition makes for greater efficiency than a fixed tariff, and if so, then to what extent. We also examine how efficiency gains are distributed between retailers and consumers. According to the results, the price signal to consumers under ToU pricing may be effective for modifying their consumption patterns and obtaining social welfare gains. As for the intermediate values of consumers’ elasticities, ToU pricing is a win–win for both retailers and consumers. This has substantial implications in terms of cost-efficiency. © 2023 The Author(s)We acknowledge the editor and two anonymous referees for their valuable comments. This work was supported by the Ministry of Science and Innovation, Spain ( PID2019-108718GB-I00 ) and the Basque Government, Spain ( IT1461-22 , BFI-2011-301 ). Cristina Pizarro-Irizar also acknowledges the financial support from IBERDROLA Foundation, Spain (Convocatoria de Ayudas a la Investigación en Energía Medio Ambiente: ENERGÍA PARA LA INVESTIGACIÓN).Economic Modelling202320232023info:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10810/61401reponame:Addi. Archivo Digital para la Docencia y la Investigacióninstname:Universidad del País VascoInglésinfo:eu-repo/grantAgreement/MCIN/PID2019-108718GB-I00/info:eu-repo/grantAgreement/Basquegovernment/IT1461-22/info:eu-repo/grantAgreement/EJ-GV/BFI-2011-301/info:eu-repo/grantAgreement/MCIN/PID2019-108718GB0/https://dx.doi.org/10.1016/j.econmod.2023.106215info:eu-repo/semantics/openAccesshttp://creativecommons.org/licenses/by-nc-sa/3.0/es/© 2023 The Author(s). Published by Elsevier B.V.Atribución-NoComercial-CompartirIgual 3.0 Españaoai:addi.ehu.eus:10810/614012026-06-18T09:23:17Z
dc.title.none.fl_str_mv Pricing policies for efficient demand side management in liberalized electricity markets
title Pricing policies for efficient demand side management in liberalized electricity markets
spellingShingle Pricing policies for efficient demand side management in liberalized electricity markets
Ciarreta Antuñano, Aitor
Demand-side management
Electricity market
Retail pricing policies
Switching costs
Time-of-use pricing
Welfare gains
title_short Pricing policies for efficient demand side management in liberalized electricity markets
title_full Pricing policies for efficient demand side management in liberalized electricity markets
title_fullStr Pricing policies for efficient demand side management in liberalized electricity markets
title_full_unstemmed Pricing policies for efficient demand side management in liberalized electricity markets
title_sort Pricing policies for efficient demand side management in liberalized electricity markets
dc.creator.none.fl_str_mv Ciarreta Antuñano, Aitor
Espinosa Alejos, María Paz
Pizarro Irizar, María Cristina
author Ciarreta Antuñano, Aitor
author_facet Ciarreta Antuñano, Aitor
Espinosa Alejos, María Paz
Pizarro Irizar, María Cristina
author_role author
author2 Espinosa Alejos, María Paz
Pizarro Irizar, María Cristina
author2_role author
author
dc.subject.none.fl_str_mv Demand-side management
Electricity market
Retail pricing policies
Switching costs
Time-of-use pricing
Welfare gains
topic Demand-side management
Electricity market
Retail pricing policies
Switching costs
Time-of-use pricing
Welfare gains
description International experience has shown that electricity consumers react to pricing policies by switching retailers or shifting part of their consumption from peak to off-peak hours. This behavior has a direct effect on the competition between retailers. In the light of this evidence (and considering the increasing penetration of smart meters) this study presents a theoretical framework in which retailers compete on time-of-use (ToU) pricing. In this case, the model is calibrated with Spanish data. Our objective is to determine whether the ToU pricing that emerges from the retail competition makes for greater efficiency than a fixed tariff, and if so, then to what extent. We also examine how efficiency gains are distributed between retailers and consumers. According to the results, the price signal to consumers under ToU pricing may be effective for modifying their consumption patterns and obtaining social welfare gains. As for the intermediate values of consumers’ elasticities, ToU pricing is a win–win for both retailers and consumers. This has substantial implications in terms of cost-efficiency. © 2023 The Author(s)
publishDate 2023
dc.date.none.fl_str_mv 2023
2023
2023
dc.type.none.fl_str_mv info:eu-repo/semantics/article
format article
dc.identifier.none.fl_str_mv http://hdl.handle.net/10810/61401
url http://hdl.handle.net/10810/61401
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv info:eu-repo/grantAgreement/MCIN/PID2019-108718GB-I00/
info:eu-repo/grantAgreement/Basquegovernment/IT1461-22/
info:eu-repo/grantAgreement/EJ-GV/BFI-2011-301/
info:eu-repo/grantAgreement/MCIN/PID2019-108718GB0/
https://dx.doi.org/10.1016/j.econmod.2023.106215
dc.rights.none.fl_str_mv info:eu-repo/semantics/openAccess
http://creativecommons.org/licenses/by-nc-sa/3.0/es/
© 2023 The Author(s). Published by Elsevier B.V.
Atribución-NoComercial-CompartirIgual 3.0 España
eu_rights_str_mv openAccess
rights_invalid_str_mv http://creativecommons.org/licenses/by-nc-sa/3.0/es/
© 2023 The Author(s). Published by Elsevier B.V.
Atribución-NoComercial-CompartirIgual 3.0 España
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Economic Modelling
publisher.none.fl_str_mv Economic Modelling
dc.source.none.fl_str_mv reponame:Addi. Archivo Digital para la Docencia y la Investigación
instname:Universidad del País Vasco
instname_str Universidad del País Vasco
reponame_str Addi. Archivo Digital para la Docencia y la Investigación
collection Addi. Archivo Digital para la Docencia y la Investigación
repository.name.fl_str_mv
repository.mail.fl_str_mv
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