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

Thomas Broberg, Runar Brännlund, and Lars Persson

Year: 2021
Volume: Volume 42
Number: Number 1
DOI: 10.5547/01956574.42.1.tbro
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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).



How Valuable is the Reliability of Residential Electricity Supply in Low-Income Countries? Evidence from Nepal

Anna Alberini, Jevgenijs Steinbuks, and Govinda Timilsina

Year: 2022
Volume: Volume 43
Number: Number 4
DOI: 10.5547/01956574.43.4.aalb
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Abstract:
We use contingent valuation to estimate the willingness to pay (WTP) for improved electricity service in Nepal following the end of the country's load-shedding crisis of 2007–2016. Using a nationally representative survey of grid-connected Nepali households, we calculate the WTP per outage-day avoided and the value of lost load (VoLL) for residential customers and analyze their key drivers, including income, education, and investments in own generation or electricity storage equipment. Households are willing to pay, on average, 123 NR ($1.11) per month for improved quality of power supply. In other words, they would be prepared to see a 65% increase in their monthly bill to avoid outages. Our preferred estimates of the VoLL range from 5 to 15 NR/kWh (¢4.7–¢14/kWh). These estimates are below the marginal cost of avoided load shedding, and are virtually the same as valuations at the beginning of the load-shedding crisis.





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