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Estimating the Impact of Time-of-Use Pricing on Irish Electricity Demand

Smart meters, in conjunction with time-of-use (TOU) pricing, can facilitate an improvement in energy efficiency by providing consumers with enhanced information about electricity consumption and costs, and thereby encourage a shift away from consumption during peak hours. In 2009-10, the Irish Commission for Energy Regulation co-ordinated a randomised controlled trial in the Irish residential electricity market. Smart meters were introduced in approximately 5,000 households, divided into control and treatment groups, with treatment groups exposed to a variety of TOU tariffs and information stimuli. This paper analyses the response of Irish households at different times of the day to the introduction of TOU tariffs and information stimuli. We find that these measures have a significant effect in reducing electricity consumption in Ireland, particularly during peak hours. However, while households reduce peak demand significantly after the introduction of TOU tariffs and associated information, there is little incremental response to increasing differentials between peak and off-peak prices. Keywords: Household electricity demand, Electricity pricing, Smart metering

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DOI: 10.5547/01956574.35.2.6

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Published in Volume 35, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.