Testing for non-linear willingness to accept compensation for controlled electricity switch-offs using choice experiments

Jacob Ladenburg*, Kirsten Lund Jensen, Christa Lodahl, Dogan Keles

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

With a higher share of renewable energy in the energy production mix, the need for a flexible electricity production, storage and demand increases. At household level, flexibility in the electricity consumption has the potential to mitigate unexpected drastic shortages of electricity in the system. The efficiency of household flexibility depends on the level of compensation needed to make households accept restrictions in their electricity consumption. The present paper contributes to a growing literature estimating the compensation requirements. Using the economic valuation methods choice experiments, we estimate the amount of compensation needed for households to accept contracts, which allow the energy company to remotely switch off the washing machine, laundry dryer and dishwasher in the household. The contracts vary with the number of times the appliances can be switched off in a year and the duration of each switch off event. Households are willing to accept contracts that allow the energy company to turn off individual devices and charge compensation ranging between 4.8 and 99.0 €/year, depending on the type of contract. The compensation level is found to increase exponentially with the number of annual switch-offs and a linearly with the duration of each switch-off.

Original languageEnglish
Article number121749
JournalEnergy
Volume238
ISSN0360-5442
DOIs
Publication statusPublished - 2022

Bibliographical note

Funding Information:
This paper was written as part of project 1305-00021B under the Danish Council for Strategic Research and project 0602-00205B under the Danish Agency for Science, Technology and Innovation. The authors would like to thank Maria Skotte, Director at CLEAN for valuable comments. Any remaining errors are, of course, the sole responsibility of the authors.

Publisher Copyright:
© 2021 Elsevier Ltd

Keywords

  • Certainty in choice
  • Choice experiment
  • Consumer contracts
  • Controlled switch-off
  • Transitivity
  • Willingness To Accept

Fingerprint

Dive into the research topics of 'Testing for non-linear willingness to accept compensation for controlled electricity switch-offs using choice experiments'. Together they form a unique fingerprint.

Cite this