Consumers’ Willingness to Accept Time-of-Use Tariffs for Shifting Electricity Demand

Abstract

Time-of-use (TOU) electricity tariffs represent an instrument for demand side management. By reducing energy demand during peak times, less investments in otherwise necessary, costly, and CO2 intensive redispatch would be required. We use a choice experiment (CE) to analyze private consumers’ acceptance of TOU tariffs in Germany. In our CE, respondents choose between a fixed rate tariff and two TOU tariffs that differ by peak time scheme and by a control of appliances’ electricity consumption during that time. We use a mixed logit model to account for taste heterogeneity. Moreover, investigating decision strategies, we identify three different strategies that shed light on drivers of unobserved taste heterogeneity: (1) Always choosing the status quo, (2) always choosing the maximum discount, and (3) choosing a TOU tariff but not always going for the maximum discount. Overall, about 70% of our 1398 respondents would choose a TOU tariff and shift their electricity demand, leading to a decline in energy demand during peak times. Rough estimates indicate that this would lead to significant savings in electricity generation, avoiding up to a mid to large-sized fossil-fuel power plant.

On the Acceptability of Electricity Demand Side Management by Time of Day

“…According to their results, the households required considerable compensation, although they recognized the environmental value of DSM. In the choice experiment conducted by Sundt et al [19] in Germany, and the demonstration experiment conducted by Nilsson et al [20] in Sweden, people changed their behavior to reduce power consumption during peak hours, using time-of-use (TOU) electricity tariffs as an indicator. In fact, the feasibility of DSM in the sense of shifting power usage time slots was confirmed.…”

The Impact of Economic and Non-Economic Incentives to Induce Residential Demand Response—Findings from a Living Lab Experiment

“…In [15] different platform pricing strategies in order to incentivize consumers to participate in automatic demand response programs are analyzed. The authors in [16] conducted a choice experiment to examine consumers' acceptance of TOU tariffs in Germany, with the result that 70% of the 1398 respondents would be willing to choose a TOU tariff. In order to reduce the stress and limit further needed cost-intensive infrastructure expansion in domestic electricity grids, the authors in [17] aim to reduce the peak demand of private households, using a time-of-use tariff and a peak capacity pricing tariff, where the electricity price rests on the daily maximum power demand.…”

Effects of a Battery Energy Storage System on the Operating Schedule of a Renewable Energy-Based Time-of-Use Rate Industrial User under the Demand Bidding Mechanism of Taipower

“…In terms of energy management, it is commonly divided into three aspects: demand side management, peak load regulation, and carbon emission reduction. In the last decade, studies have focused on load clipping with time-of-use rates [9], real-time pricing [10,11], and demand bidding [12]. These topics were proposed either to increase society's benefit from the use of electrical power or reduce the cost of electricity for TOU rate users.…”