3:30 pm - 5:00 pm
550 General Services Building, 550 General Services Building University of Alberta , Edmonton Alberta
Title: Centralized vs Decentralized Demand Response: Evidence from a Field Experiment” (joint with Megan Bailey, Blake Shaffer, and Frank Wolak)
Speaker: Dr. David Brown, University of Alberta, Department of Economics
Date: Friday, March 10, 2023
Time: 3:30 – 5:00 PM
Location: 550 General Services Building
Peak electricity demand is expected to increase due to rising temperatures and the increased electrification of transportation and heating. In addition, there is increased uncertainty in electricity supply as renewable generation grows and extreme events raise resiliency concerns. These factors enhance the value of flexible electricity demand. However, consumers’ responses to price signals are limited due to cognitive, behavioral, and technological barriers. We investigate if direct control of electricity demand during peak times can reduce demand more than improvements to peak pricing and prevent large welfare losses from blackouts. In partnership with a Canadian electric utility, we run a large-scale experiment in which we offer residential customers smart home electricity management equipment in combination with either a peak load pricing program or a “centralized control” program that enables the utility to directly alter customers’ thermostats, hot water heater, and/or electric vehicle charger electricity usage. We find that customers who’ve conceded electricity usage control to the utility significantly outperform other groups in reducing demand during peak events. Further, we find that the acceptance rate of direct load control closely parallels the price-based treatments.