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Peak Load Habits for Sale? Soft Load Control and Consumer Preferences on the Electricity Market

Abstract:
The main purpose of this paper is to estimate lost consumer values due to various restrictions on household electricity use involving behavior adaptation. To do this, we conduct a choice experiment where households choose between hypothetical electricity contracts including various restrictions on the use of high-power household appliances. In addition, we use a contingent valuation question related to complete blackouts to study a restriction on other types of electricity usage (heating, lighting, TV, etc.). The results indicate a significant difference between the value lost due to the soft control, and the blackouts. Furthermore, policies aiming at stimulating behavioral changes are costly and it is far from obvious that demand response requiring behavioral adaptation is more cost effective than supply response (i.e., increased production of electricity).

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Keywords: Value of lost load, Choice experiment, Electricity contracts, Demand response

DOI: 10.5547/01956574.42.1.tbro

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Published in Volume 42, Number 1 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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