The hidden cost of real time electricity pricing
Research output: Working paper › Research
In theory real time pricing ensures more efficient electricity markets than time of use pricing. However, people are prone to habits and regularity, so real time pricing may impose a greater cost of reacting on consumers. In a randomized field experiment we compared the cost of reacting to incentives under these two pricing regimes. We utilized smart-metered hourly power consumption to unobtrusively measure treatment effects. We found that real time pricing reduces consumer surplus from reacting to incentives by half, compared to reacting under a corresponding time of use pricing regime. This suggests a substantial economic value to households of the regularity and predictability provided by time of use pricing.
Original language | English |
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Publisher | Department of Food and Resource Economics, University of Copenhagen |
Number of pages | 30 |
Publication status | Published - 2019 |
Series | IFRO Working Paper |
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Number | 2019/03 |
Links
- https://econpapers.repec.org/RePEc:foi:wpaper:2019_03
Final published version
ID: 225663168