Analyzing the energy system impacts of price-induced demand-side-flexibility with empirical data. (10th January 2021) - McKenna, Russell
Abstract: This paper assesses the potential effects on the energy system from a full roll out of a smart phone app designed to connect household electricity consumers with their consumption and price data. The effects of the app in allowing greater demand-side flexibility from household consumers is estimated based on data from an 18-month field trial involving 1557 Austrian households. These estimates are given as hourly price elasticities of electricity demand and hourly energy efficiency treatment effects from consumer engagement with the app. In a novel methodological coupling, the econometric estimates are input into the Balmorel energy system model, which is used to analyze future scenarios of full renewable energy deployment in the Austrian energy system. The results demonstrate that the impact of the flexible residential demand for electricity is small but significant to future system costs. The total discounted system cost increases by 20–24% in the renewable energy scenarios, compared to a business as usual scenario, due to heavy investments in renewable generation. However, system cost is reduced by 4–7% in renewable energy scenarios where the observed demand-side flexibilities are considered. The results are subject to several methodological caveats, but they give a clear signal that ICT-enabled demand side flexibility can be an important cost-saving element that should be integrated into the future energy system and considered in system-level models. Highlights: Employ data from dynamic-pricing field trial of 1500 households. Econometric model derives app users' price elasticities. Elasticities applied in national energy system model to analyze impacts. Substantial 4–7% cost savings from flexible demand for system. Flexible demand should be included in energy system models.