Scandinavian Working Papers in Economics
CERE Working Papers,
CERE - the Center for Environmental and Resource Economics
No 2018:4: Benefits of real-time pricing and rooftop solar PV generation: Explorations using Swedish micro-data
Chandra K.B. Krishnamurthy (), Mattias Vesterberg (), Herman Böök (), Anders V. Lindfors () and Rauli Svento ()
Additional contact information
Chandra K.B. Krishnamurthy: CERE - the Center for Environmental and Resource Economics, Postal: Department of Economics, Umeå University, S-901 87, Umeå, Sweden
Mattias Vesterberg: CERE - the Center for Environmental and Resource Economics, Postal: Department of Economics, Umeå University, S-901 87, Umeå, Sweden
Herman Böök: Finnish Meteorological Institute, Postal: Finnish Meteorological Institute, Helsinki
Anders V. Lindfors: Finnish Meteorological Institute, Postal: Finnish Meteorological Institute, Helsinki
Rauli Svento: Oulu Business School, Postal: Oulu Business School, Oulu University, Finland
Abstract: Previous empirical literature on residential dynamic pricing for the Nordic market has questioned whether households will in fact appropriately respond, in view of the low price variability and price responsiveness in the Swedish setting. Household demand response is an issue of some importance in view of increasingly smart grids in which high shares of renewable supply are being promoted partly in view of these possibilities. In addition, an important development in the Nordic market relates to increasing thrust on household PV panels. In view of the interaction between RTP-driven and PV generation-driven load changes, an analysis of the combined effects in relation to system timing is important to understand, not least because this can affect the nature of benefits to households and the electric grid. Using a unique and very detailed dataset on household electricity consumption, in combination with simulated solar panel micro-generation data, these aspects are explored in an empirical framework similar to that used in the prior literature. Our findings indicate that even with minimal price responsiveness, household response to dynamic pricing can lead to load changes with sizeable benefits. In addition, the introduction of PV panels, contrary to what may be assumed at a first glance, appear to be beneficial to the electric grid, largely due to the time pattern of winter PV generation. Overall, our empirical findings provide tentative evidence to indicate that RTP, by incentivizing households to provide demand response at appropriate times, can aid in integration of renewables.
Keywords: Real time electricity pricing; energy demand; renewable energy; intermittency
41 pages, March 19, 2018
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