Scandinavian Working Papers in Economics

CERE Working Papers,
CERE - the Center for Environmental and Resource Economics

No 2015:6: Is our everyday comfort for sale? Preferences for demand management on the electricity market

Thomas Broberg () and Lars Persson ()
Additional contact information
Thomas Broberg: CERE, Postal: CERE, USBE, Umeå University, SE-90187 Umeå
Lars Persson: CERE, Postal: CERE, USBE, Umeå University, SE-90187 Umeå

Abstract: In a European perspective, the electricity markets have been experiencing major changes via deregulation, new technologies and changes in the production mix. Together with the daily and seasonal peak hours on the demand side, the changing markets put pressure on increased flexibility to handle and sustain balance in the grid systems. This paper focuses on the demand side and analyzes preferences related to demand management of Swedish households energy use. Preferences are analyzed within the framework of choice experiments and people are faced with hypothetical electricity contracts. The respondents reveal their preferences for attributes related to external control of heating, household electricity and information dissemination (integrity). The results show that people put a substantial value on not being controlled, illustrated by compensations up to thousands of SEK for accepting a contract characterized by external control of energy use in various dimensions. In addition, the results show that household composition, age, gender and income play a role for the perceived discomfort from the external control and information dissemination.

Keywords: choice experiment; demand side management; electricity market; energy policy; demand flexibility; smart grids

JEL-codes: Q40; Q41

19 pages, June 8, 2015

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