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Dynamic Pricing and the Peak Electricity Load Problem
Author(s) -
Simshauser Paul,
Downer David
Publication year - 2012
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/j.1467-8462.2012.00687.x
Subject(s) - electricity , investment (military) , load shifting , economics , sample (material) , electricity market , dynamic pricing , peak demand , electricity price , electricity pricing , demand response , natural resource economics , microeconomics , market economy , industrial organization , business , engineering , electrical engineering , chemistry , chromatography , politics , political science , law
Reforms to Australia's 45,000 MW electricity market were met with remarkable success, but wholesale market gains have been largely exhausted. Above‐trend growth in investment in energy infrastructure is driving retail prices to levels that triggered the sectoral assault in the first place. This pressure should initiate the last piece of the reform puzzle—removing price regulation, installing smart meters and implementing dynamic pricing to halt the primary cause of the problem, rapidly rising peak demand. We find that such a change can lead to non‐trivial reductions in household peak demand, with our sample load factor improving by 9 percentage points .