Consumer preferences for the design of a demand response quota scheme – Results of a choice experiment in Germany

Abstract

Demand response (DR) programs are increasingly discussed as policy options to facilitate an efficient energy transition. More recently, quota schemes, a novel type of incentive-based DR program that aims to restrict electricity consumption of some household appliances at certain times, have received considerable attention as a tool for preventing local grid congestion. However, little is known about the preferences of household consumers regarding the design of DR programs in general and quota schemes in particular. We examined the preferences of 1034 German consumers using data from a choice experiment. Our model results show that respondents’ choices for quota scheme designs are mainly driven by the time period during which consumption is constrained, followed by the financial compensation. That said, the order of importance reverses if consumers are free to choose whether to participate or not, while the frequency and duration of DR measures remain unimportant. This shift in preferences suggests that preferences for certain DR programs may not necessarily translate into willingness to participate. Sociodemographic characteristics explain these preferences only to a limited extent, with female and older persons and persons currently purchasing green electricity showing a slightly higher willingness to participate. We discuss policy implications arising from these findings.