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Time of Use tariff experiment

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  • 1. Time of use pricing: an experimentJohn Williams, Rob Lawson and Paul Thorsnes
  • 2. AgendaWhy the research was doneSample descriptionNature of dataResultsConclusions
  • 3. Overview of the experimentIn 2008 we were approached by a major electricity retailerto help them design a trial of Time of Use (TOU) pricing fortheir household marketAim: to shift electricity use from peak to off-peak timesTheory: simple economics (price elasticity of demand) “Peak” is 7AM to 7PM, Monday to Friday “Off-peak” is 7PM to 7AM, weekends and public holidays The trial ran from August 1st 2008 to July 31st 2009
  • 4. Participating households 332 households participated in the survey and the experiment (400 recruited) 82 households only received information on energy saving behaviours 84 received information and were given a 4₵ price differential 78 information and a 10₵ differential 88 information with a 20₵ price differential Control group of 55 households
  • 5. Household characteristics Median age: 50–54 bracket Median household income: $90,000–$99,999 per annum before tax 19% of the households without paid employment 35% have at least two people in full-time employment Average time spent away from home during a normal weekday is 6 hours
  • 6. Household characteristics Few Māori (22) or Pacific Island (12) people in the sample (7% & 4% respectively) 233 of the 322 households (72%) have lived the majority of their life in Auckland 21 households (7%) have moved from other parts of New Zealand 68 households (21%) from outside NZ; main origins being China (19), India (10) and the U.K. (9)
  • 7. Characteristics of meter dataAnalysis was extremely complex because of: Huge variation between seemingly similar households Missing (estimated) data – especially in the year prior to the study Systematic variations in consumption between the different groups before the experiment started Seasonality Existence of different pricing plans with different fixed prices
  • 8. Total electricity use
  • 9. Total use: group effect Start of Experiment
  • 10. Proportion of off-peak use ANZACWaitangi Easter Christmas
  • 11. Total use & proportion of off peak use Two readings of total kWh used for each household, for each day: one for total kWh at peak times; one for off- peak Households could switch their use within each weekday; or from weekdays to weekends, hence smallest valid period for aggregation is weekly However people probably react to monthly power bills, so we choose the smallest sensible aggregation period to be monthly Used Linear Mixed Effects modeling
  • 12. Within and between household
  • 13. Explanatory variables Experimental group Time Pricing plan (daily fixed charge, per kWh, controlled) House: floor area, age, value, number of rooms, number of heated rooms, whether a non-electric source of water heating is available Household: number of people, has special needs, use of appliances, income, hours away from home Householder: motivations for changing electricity use,
  • 14. Explaining total use Significant explanatory variables: time, plan, hot water, floor area, special needs, “The Earth is like a spaceship”, income (before, not during), hours at home There is no difference between the households in the experiment and the control group; nor between any experimental group and any other experimental group TOU pricing has no effect on total electricity usage
  • 15. Explaining proportional use Quantified load shifting by the proportion of use at off- peak times relative to total use, i.e. OP / (OP + P) Explanatory variables as for Total use Significant explanatory variables: time, plan, income, hours at home No difference between either l (a) the control group and the experimental groups; or l (b) any experimental group and any other experimental group
  • 16. Summary of use modellingDependent Period Comparison GoF GoF Group Effect?Variable Between Within (p)Total Before Control 0.59 0.91 0.856 Info 0.67 0.90 0.851 During Control 0.52 0.82 0.939 Info 0.62 0.81 0.932Proportion Before Control 0.06 0.78 0.058 Info 0.25 0.79 0.163 During Control 0.05 0.64 0.042 Info 0.23 0.64 0.165
  • 17. Post-trial surveyChange made % Main methodsInstalled insulation 7 Ceiling (batts) Water cylinder and pipesNew heating appliances 19 Heat pumpsNew lighting methods 11 Low energy bulbsNew appliances 33 TVs DehumidifiersUse of heating 44 Closing doors Not heating unused areas Turning off towel rails Substituting (electric blankets) Reducing time heaters onUse of lighting 41 Turning off unused lightsUse of hot water 34 Washing clothes in cold water Shorter showers Reduced hot water temperatureUse of other appliances 45 Reduced use of clothes driers Turned off appliances at wall (tv)Changed time of use 66 Dishwasher, heaters, Washing machines, showers
  • 18. Attitudes to the TOU pricing trial% endorsing each response Strongly Agree Neither Disagree Stronglyto the question agree agree or disagree disagreeThe differences in prices 25 49 12 12 2was an incentive to changethe time of useThe difference in prices was 7 30 12 41 6too small to make the effortEasy to change to take 14 50 15 17 3advantage of pricesToo much trouble to change 1 17 11 60 9
  • 19. Summary Post-trial sentiments very positive — saving dollars? Lot of change during trial period Across the whole of the study TOU pricing has no effect on either of  a) total electricity use by households in the study area; or  b) proportion of electricity used at off-peak times Factors that influence both variables are:  Time, plan, number of people in the household, personal values regarding conservation, hours at home, (possibly) income