Context and background: In the energy economics literature price elasticity is the main proxy for calculating the average change in demand by (groups of) end-users following variations in prices (Torriti, 2014). This does not reflect how people’s flexibility varies based on the time of the day, location, work and social commitments.
Aim: This project will move thinking beyond average price elasticities by critically engaging with existing work on price elasticity, focusing on time-of-day fixities, considering wider societal impacts of dynamic pricing, comparing elasticities across different types of derived demand, estimating how price elasticities vary according to the time of the day, weather and occupancy levels.
Questions and methods: This project will address key questions on how does price elasticity change based on the time of the day. It will explore the relationships between elasticity and flexibility. By doing so, it will examine how elasticity is dependent by variables other than prices, such as fixities around routines and schedules. This work will require critical engagement with energy elasticity literature and scholars. It will
inform work which makes use of elasticity (e.g. energy and transport regulators introducing time-of-day pricing) for dynamic tariff planning.
The project will:
a) critically review existing work and projects on short term price elasticity;
b) derive fixities in what people do from UK time use data;
c) assess wider impacts of dynamic pricing;
d) compare dynamic pricing of household electricity, transport and other sectors; e) measure time-of-day price elasticity;
f) create new metrics based on non-price elasticities.
Methods will involve meta-analysis of price elasticity; analysis of time use data; econometric analysis of distributional effects of ToU tariffs; cross-sectoral comparative analysis of price elasticity; analysis of price signals at different scales; new elasticity metrics.
Outputs: 1 review paper of existing elasticity estimates; 2 research articles on energy economics journal; 1 research article on different elasticity metrics; 1 conference paper on time use data analysis; 4-5 blog articles; 1 workshop on derived elasticity; 1 impact event (Ofgem and BEIS); exchange with UKCRED visitors.
April 2021 – March 2023