Measuring the impact of time-of-use pricing on electricity consumption: Evidence from Spain
We evaluate the effect of a time-of-use pricing program introduced in Spain on residential electricity consumption. Using a Difference-in-Difference approach, we find that households responded by reducing consumption during peak hours. We then use machine learning for variable selection and show tha...
| Autores: | , , , |
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| Tipo de recurso: | artículo |
| Fecha de publicación: | 2024 |
| País: | España |
| Institución: | Consejo Superior de Investigaciones Científicas (CSIC) |
| Repositorio: | DIGITAL.CSIC. Repositorio Institucional del CSIC |
| OAI Identifier: | oai:digital.csic.es:10261/354729 |
| Acceso en línea: | http://hdl.handle.net/10261/354729 |
| Access Level: | acceso abierto |
| Palabra clave: | Demand response Dynamic pricing Electricity |
| Sumario: | We evaluate the effect of a time-of-use pricing program introduced in Spain on residential electricity consumption. Using a Difference-in-Difference approach, we find that households responded by reducing consumption during peak hours. We then use machine learning for variable selection and show that it is able to capture pre-trends unrelated to the policy, improving the credibility of our estimates. We find that the program could have reduced consumption by up to 9% during peak periods, with significant spillovers to weekends. Using a more conservative estimator, we find that it reduced consumption by at least 1%–2% during peak periods. We find evidence of habit formation during periods of uniform pricing, accompanied by an adaptation process that ends with a permanent change in consumption behavior. The results suggest that a predetermined pricing program can enhance consumer awareness and increase household price elasticity, thus making it an effective policy tool to reduce peak electricity demand and improve market efficiency. |
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