Electricity pricing, Economics, Households, and Electric power consumption
Abstract
In this paper, we review studies to understand how much households change their electricity consumption when there is a price change. Many studies find residential households have long‐term and short‐run elasticities behaving as economic theory would suggest. Long‐run elasticities range from −0.75 to −0.3, and short‐run elasticities range from −0.47 to −0.026. Household responsiveness seems to increase when paired with technology. The major gaps in research from the empirical economic literature are how low‐income and vulnerable Australian households could be affected by price changes and how Australians respond to within‐day variation in prices. [ABSTRACT FROM AUTHOR]
Consumers, Prices, Retail stores, Electricity, and Agriculture
Abstract
The price consumers pay for electricity may vary from what a neighbor, shop owner, or others might pay. Utility rates are composed of many components and vary by customer type (residential, commercial agriculture, etc.), amount of energy used, income level, location, and other factors. Until recently, the time of day a customer uses energy has not affected a customer's bill, even though the cost to produce and deliver electricity varies significantly throughout the day. [ABSTRACT FROM AUTHOR]
Market prices, Independent power producers, Industrial procurement, Prices, Fossil fuels, Electricity, and Energy industries -- United States
Abstract
This paper investigates the transmission of fossil fuel commodity spot market price changes to procurement costs of U.S. power producers. We measure and compare the speed and magnitude with which spot prices predict procurement costs using restricted access fuel price data. Natural gas spot prices are quickly reflected in procurement costs. Coal spot prices offer very little predictive power to coal procurement costs. Although not causal, the empirical results also show differences across regulatory status. These findings may have implications for the electricity market deregulation literature that creates marginal cost curves as a competitive benchmark. [ABSTRACT FROM AUTHOR]
Uppari, Bhavani Shanker, Popescu, Ioana, and Netessine, Serguei
INSEAD Working Papers Collection. 2017, Issue 32, preceding p1-51. 52p.
Subjects
Consumer behavior, Liquidity (Economics), Business models, Micropayments (Electronic commerce), Prices, Light bulbs, and Underclass
Abstract
Problem definition: A large proportion of the world's population has no access to electricity and so relies on noxious kerosene for their lighting needs. Solar-based solutions require a large upfront investment and are often unaffordable in this market owing to consumers' tight liquidity constraints. As an alternative, there are business models relying on rechargeable light bulbs that are sold at a subsidized price (which renders them affordable) and require regular micropayments for recharges (which eases liquidity constraints). These bulbs provide a cheaper and healthier light source than kerosene, yet their adoption is lower than expected and some consumers continue to use kerosene. This paper explores the potential drivers of such preferences and proposes strategies to alter them, thereby benefiting firms, consumers, and the environment. Academic Relevance: Unlike most of the existing operations management literature which focuses on the problems in developed economies, our paper studies a problem specific to the poor population. Our novel modeling approach, which incorporates several operational features of the impoverished regions, could also serve as a template for other potential modeling attempts in similar settings. Methodology: We propose a stylized consumer behavior model that accounts for { in addition to the monetary cost incurred while using a particular light source { the inconvenience cost (due to repeated travel to the purchase center) and blackout cost (due to liquidity constraints) associated with that source, to explain the consumer preference for kerosene and to recommend strategies that could mitigate that preference. Results: Although kerosene lighting is more expensive than bulbs, consumers who face either high inconvenience costs or high blackout costs prefer kerosene to bulbs because the former's flexibility, with regard to quantity, helps reduce whichever cost is dominating. At the firm level, there is an optimal bulb capacity and recharge price pair that maximizes the firm's revenue; furthermore, firm can reverse the preferences of kerosene consumers by increasing the flexibility of the bulbs (e.g., by allowing partial recharges). Although strategies { such as price discounts and mobile micropayments { based on alleviating liquidity constraints are not in themselves sufficient to ensure higher adoption rates, increased bulb use becomes more likely when they are combined with strategies to reduce consumers' inconvenience. Managerial Implications: Our paper sheds light on the structure of the market in which firms operate by identifying the characteristics of the market segments that prefer kerosene. It also helps the firms make better decisions by evaluating the efficacy of several strategies in terms of increasing the adoption of bulbs. [ABSTRACT FROM AUTHOR]
Uniejewski, Bartosz, Marcjasz, Grzegorz, and Weron, Rafał
International Journal of Forecasting. Oct2019, Vol. 35 Issue 4, p1533-1547. 15p.
Subjects
Electricity pricing, Markets, Prices, Market design & structure (Economics), Forecasting, Load forecasting (Electric power systems), and Electricity
Abstract
We use a unique set of prices from the German EPEX market and take a closer look at the fine structure of intraday markets forelectricity, with their continuous trading for individual load periods up to 30 min before delivery. We apply the least absolute shrinkage and selection operator (LASSO) in order to gain statistically sound insights on variable selection and provide recommendations for very short-term electricity price forecasting. [ABSTRACT FROM AUTHOR]
Economic activity, Electric power consumption, Electricity, Canaries, Tourists, International tourism, and Electrical energy
Abstract
The Canary Islands is a European archipelago whose principal economic activity is international tourism. Due to its geographic isolation, it does not have any connection with continental electricity grids. The Spanish state subsidises the extra cost of electrical energy generation in isolated systems. The purpose of this study is to quantify the proportion of the electricity bill that corresponds to tourist activity that is being subsidised. With this aim, three complementary methodologies have been developed. These tools could also be used in similar environments. The results reveal an average tourist sector consumption in the study years (2014–2017) between 12.8% and 16.5% of the total amount of electricity generated in the archipelago, with a monetary value of Spanish state subsidy estimated in €143.5 M in the year 2014. Additionally, a calculation was made of the values of CO 2 emissions due to tourist electricity consumption for the years of the study period, with an estimated peak of 1.1 MtCO 2 in 2017. From the point of view of energy policy, these results could be used to justify the adoption of various types of compensatory measures, including ecotaxes to be paid by the tourist visitor. • Isolated electrical systems operate at extra costs justifying state subsidies. • Tourist activity contributes to extra costs in insular electrical systems. • Tourist sector benefits from state subsidies in electricity consumption. • Compensatory measures applied to the tourist sector could be set by the government. [ABSTRACT FROM AUTHOR]
Solar energy industries, Public utilities, Storage batteries, Electric power distribution grids, Prices, and Electricity
Abstract
The article provides updates on the solar energy and utilities industry as of January 2018. Topics mentioned include a decline in storage prices and battery costs from 2010 to 2016, the reason why partial grid detection reduces demand for power given by utilities, and examples of places where electricity is expensive and solar is widely available.
Markets, Forecasting, Prices, Electricity, Wavelet transforms, and Neural circuitry
Abstract
In this paper, a new feature selection and forecast engine is presented for day ahead prediction of electricity prices, which are so valuable for both producers and consumers in the new competitive electric power markets. In a competitive electricity market, forecast of energy prices is a key information for the market participants. However, price signal usually has a complex behavior due to its nonlinearity, non-stationary, and time variance. Also, an appropriate feature selection is crucial for accurate forecasting. In this paper, a two-step approach that identifies a set of candidate features based on the data characteristics proposed and then selects a subset of them using correlation and instance-based feature selection methods, applied in a systematic way. Then, a combination of wavelet transform (WT) and a hybrid forecast method is presented based on neural network (NN) and an optimization algorithms. The proposed method is examined on PJM electricity market and compared with some of the most recent price forecast methods. These comparisons illustrate effectiveness of the proposed strategy. [ABSTRACT FROM AUTHOR]
Energy Policy. Jun2019, Vol. 129, p1190-1206. 17p.
Subjects
Marketing models, Wholesale prices, Electricity pricing, Prices, Direct costing, and Electricity
Abstract
Abstract Electricity market models are widely employed to study the role, impacts and economic viability of new technologies. Sources of arbitrage, such as storage and transmission, are increasingly seen as essential for integrating higher shares of variable renewables. Understanding their operation and business case requires models which accurately represent time-series of wholesale electricity prices. We show that the prevailing assumption of generators bidding short-run marginal cost, such as in the merit order stack, substantially underestimates the spread and volatility of hourly wholesale prices. To compound this, the lack of transparent outputs from previous electricity market modelling studies makes it impossible to scrutinise the prevailing methods or provide a detailed inter-comparison. We demonstrate a simple modification to the short-run marginal cost approach that delivers improved variability in modelled prices: allowing generators to make a spread of bids, below cost for their first megawatts of capacity, above for their last. Using this model we demonstrate the impact of price variability on the operation and profitability of storage, highlighting the urgent need for greater awareness of this aspect of market model performance. Highlights • Energy modelling needs to recognise the value of full model validation. • Price variability is inaccurately represented in electricity market models. • Accurate arbitrage calculations require prices with realistic variability. • Allowing modelled plant bid away from SRMC improves model skill. • Supply curve-based models cannot give accurate price variability. [ABSTRACT FROM AUTHOR]
Energy conservation, Questionnaires, Prices, Energy consumption, Electric utilities, Electric power consumption, Households, Electricity, Household surveys, and Awareness
Abstract
An analysis of six years of electricity consumption, along with questionnaire data, highlights the importance of household characteristics and family size in predicting electricity consumption. Of the attitudinal variables, only price consciousness appears to be related to energy use; neither social responsibility nor energy and environmental consciousness measures were related to energy use. [ABSTRACT FROM AUTHOR]
Problemas del Desarrollo. Revista Latinoamericana de Economía. ene-mar2019, Vol. 50 Issue 196, p167-189. 23p.
Subjects
Electricity pricing, ECONOMIC policy, Input-output analysis, Electric power, Mexico -- Economic conditions, Mexico, and Power transmission
Abstract
This paper presents a multisectoral analysis of the increase in electricity prices in the Mexican economy, applying a pricing model and using the most recent input-output matrix. Increases in the manufacture of petroleum derivatives and coal, as electricity sources, are also analyzed. Additionally, increases in the generation, transmission and distribution of electricity are studied. The key findings obtained from this analysis show that a 40% increase has the most significant impact on sectors such as air transport (7.76%); land passenger transportation (6.04%) -except rail-, tourist transport (6.04%) and on the generation, transmission and distribution of electricity (5.58%). This increase in turn impacts all subsectors of the national economy. [ABSTRACT FROM AUTHOR]
Scarcity, Prices, Electric vehicles, Electric vehicle charging stations, and Electricity
Abstract
The article reports on the decline in sales of electric cars by citing specific reference of Tesla Motors's electric vehicles, Model S and Model X. It highlights several drawbacks of electric cars which includes shortage of charging stations; high electricity costs and battery capacity that limits distance which cars can be driven between charges.
Bunn, Derek, Andresen, Arne, Dipeng Chen, and Westgaard, Sjur
Energy Journal. Jan2016, Vol. 37 Issue 1, p101-122. 22p.
Subjects
Prices, Market volatility, Risk management in business, Coal sales & prices, and Electricity research
Abstract
Forecasting quantile and value-at-risk levels for commodity prices is methodologically challenging because of the distinctive stochastic properties of the price density functions, volatility clustering and the importance of exogenous factors. Despite this, accurate risk measures have considerable value in trading and risk management with the topic being actively researched for better techniques. We approach the problem by using a multifactor, dynamic, quantile regression formulation, extended to include GARCH properties, and applied to both in-sample estimation and out-of-sample forecasting of traded electricity prices. This captures the specification effects of mean reversion, spikes, time varying volatility and demonstrates how the prices of gas, coal and carbon, forecasts of demand and reserve margin in addition to price volatility influence the electricity price quantiles. We show how the price coefficients for these factors vary substantially across the quantiles and offer a new, useful synthesis of GARCH effects within quantile regression. We also show that a linear quantile regression model outperforms skewed GARCH-t and CAViaR models, as specified on the shocks to conditional expectations, regarding the accuracy of out-of-sample forecasts of value-at-risk. [ABSTRACT FROM AUTHOR]
OR Spectrum. Jul2014, Vol. 36 Issue 3, p723-759. 37p.
Subjects
Planning, Steam power plants, Stochastic models, Simulation methods & models, Prices, Electricity, and Brownian motion
Abstract
In the present paper, we present a mid-term planning model for thermal power generation which is based on multistage stochastic optimization and involves stochastic electricity spot prices, a mixture of fuels with stochastic prices, the effect of CO $$_2$$ emission prices and various types of further operating costs. Going from data to decisions, the first goal was to estimate simulation models for various commodity prices. We apply Geometric Brownian motions with jumps to model gas, coal, oil and emission allowance spot prices. Electricity spot prices are modeled by a regime switching approach which takes into account seasonal effects and spikes. Given the estimated models, we simulate scenario paths and then use a multiperiod generalization of the Wasserstein distance for constructing the stochastic trees used in the optimization model. Finally, we solve a 1-year planning problem for a fictitious configuration of thermal units, producing against the markets. We use the implemented model to demonstrate the effect of CO $$_2$$ prices on cumulated emissions and to apply the indifference pricing principle to simple electricity delivery contracts. [ABSTRACT FROM AUTHOR]
Access to information, Prices, Home energy use, Residential energy conservation, Economic aspects of decision making, Randomized controlled trials, and Electricity
Abstract
Imperfect information about product attributes inhibits efficiency in many choice settings, but can be overcome by providing simple, low-cost information. We use a randomized control trial to test the effect of high-frequency information about residential electricity usage on the price elasticity of demand. Informed households are three standard deviations more responsive to temporary price increases, an effect that is not attributable to price salience. Conservation extends beyond pricing events in the short and medium run, providing evidence of habit formation and implying that the intervention leads to greenhouse gas abatement. Survey evidence suggests that information facilitates learning. (JEL D12, D83, L11, L94, Q41, Q54) [ABSTRACT FROM AUTHOR]
Manufacturing processes, Production (Economic theory), Production management (Manufacturing), Industrial productivity, Prices, and Economic indicators
Abstract
In multi-output settings, different types of inputs are simultaneously used in the production process. On the one hand, some inputs are jointly used to produce all (or a subset of) the outputs. These inputs give rise to economies of scope, which constitutes a prime economic motivation to produce multiple outputs. On the other hand, some inputs are allocated to specific output productions. Using nonparametric output-specific modeling of the production process, we propose a new productivity index for cost minimizing producers in these multi-output settings. The new index takes the form of a cost Malmquist productivity index. The output-specific modeling of the production process naturally allows us to define output-specific cost Malmquist productivity indexes and to disaggregate the cost Malmquist productivity index in terms of output-specific cost efficiency measurements. We also tackle the issue of input price availability and explain how to extend the cost Malmquist productivity index with partial input price information or without assuming observation of the input prices. In the latter case, we establish a duality with a technical productivity index that takes the form of a Malmquist productivity index. The new indexes can be used to evaluate cost-productivity and productivity changes or can be fairly easily combined with existing extensions. We propose an application to the electricity plants. [ABSTRACT FROM AUTHOR]
Greenhouse gas mitigation, Prices, Investments, Carbon, and Electricity
Abstract
Poland is on track to meet its international greenhouse-gas emissions commitments. However, it will need to cut emissions significantly in the future, if the European Commission's proposal on the Low Carbon Roadmap is adopted. Policies should ensure that the country's substantial reduction potential, mainly linked to the energy sector's high emissions intensity, and implying overall abatement costs above the EU-average, is realised in a least-cost fashion by imposing an economywide single carbon price. This stands in contrast with current explicit and implicit carbon prices, which vary widely across different sectors of the economy. Crucial to least-cost abatement is also a high responsiveness to the EU-ETS carbon price signal. While Poland has made good progress in complying with EU regulations related to the energy sector, the large share of public ownership and the lack of effective separation between electricity producers and distributors may blur the price signal for investment decisions in generation capacity. The isolation of the Polish electricity market implies a need for more investment in low-emission technologies in Poland to achieve a given emissions-reduction target, whereas a deeper integration with neighbouring electricity markets would spread the burden more efficiently across countries. The cost-efficiency advantage of uniform support to renewables via green certificates should be retained to minimise abatement costs. Government policies aimed at a higher share of nuclear power and natural gas from shale formations need to take fully into account tail risks and the short- and longterm environmental costs of the use of the former and fully consider environmental risks related to extraction of the latter. Energy efficiency policies can help to address market failure but should not be allowed to distort relative carbon prices. [ABSTRACT FROM AUTHOR]
Power resources, Electric industries, Prices, Electric power consumption, Electricity, and Consumers -- United States
Abstract
This article focuses on the efforts of politicians to aid electrical consumers in the United States in regards to rising electrical prices in 2008. Incentives and plans that are being considered include motivating utilities to build more plants, and creating a fund to be used to find more renewable energy sources. Details about the energy crisis are included. It is suggested that there is a need for more regulation in the power utility industry. INSET: LINKS.
Economic Development / Ekonomiski Razvoj. 2013, Issue 3, p57-71. 15p.
Subjects
Industrial management, Economic indicators, Organizational performance, Economic development, Economic competition, Liberalization (Finance), and Electric power consumption
Abstract
Electricity is certainly the most noble form of energy and it is the most important factor for the economic development of a country, which utilization that started 120 years ago has become the cornerstone of our civilization and life. Therefore, this subject is quite contemporary and this paper focuses on the detailed and practical elaboration of the economic aspects of the electricity market, starting from import, liberalization and electricity prices and its management within the frames of the European Union and the Republic of Macedonia. The analysis of this paper is focused and aims towards the importance and influence of these aspects on managing companies from the electrical energy system for the counties, achieving better business performance, improving efficiency and effectiveness in their work and development, gaining a better market position, improving competitiveness as well as economic development of the entire country. In order to achieve these goals and challenges, this research is based on carefully selected and processed data, which form the underpinning thesis for the characteristics, importance and up-to-date character of the electricity market management in the European Union and the Republic of Macedonia. [ABSTRACT FROM AUTHOR]
Journal of the Association of Environmental & Resource Economists. 2017 Supplement1, Vol. 4, pS37-S84. 48p.
Subjects
Clean energy, Renewable energy sources, Prices, Power resources, and Electricity
Abstract
Green electricity defaults should steer individual choices to environmentally friendly alternatives and provide a match with individuals' preferences for an electricity mix. It is debatable whether green electricity defaults conform to this latter intention. Using two design elements from existing electricity markets, costly opt-out of contracts and green electricity certificates, preferences for an electricity mix are elicited in an incentivized laboratory experiment. This study then assesses whether preferences in the absence of default options match with preferences in the presence of default options. It turns out that the alignment of default intentions and preferences depends on the relative price for green electricity. Green electricity defaults at low price premia, as currently applied in several electricity markets, do not match subjects' preferences. The findings are relevant for the design of green electricity defaults. [ABSTRACT FROM AUTHOR]
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