The real-time price elasticity of electricity

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Abstract

The real-time price elasticity of electricity contains important information on the demand response of consumers to the volatility of peak prices. Despite the importance, empirical estimates of the real-time elasticity are hardly available. This paper provides a quantification of the real-time relationship between total peak demand and spot market prices. We find a low value for the real-time price elasticity, which may partly be explained from the fact that not all users observe the spot market price. If we correct for this phenomenon, we find the elasticity to be fairly low for consumers currently active in the spot market. If this conclusion applies to all users, this would imply a limited scope for government intervention in supply security issues. © 2006 Elsevier B.V. All rights reserved.
Original languageEnglish
Pages (from-to)249-258
JournalEnergy Economics
Volume29
Issue number2
DOIs
Publication statusPublished - 2007

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