Evidence of households' demand flexibility in response to variable hourly electricity prices – Results from a comprehensive field experiment in Norway

Abstract

Demand-side flexibility which reacts to hourly price signals is expected to play an essential role in balancing intermittent electricity generation in the future carbon-neutral power system. This study investigates the price responsiveness of households and various influencing factors through a pricing experiment which was implemented as a reward scheme and involved 3746 Norwegian households. These households, characterised by a highly electrified energy usage such as electric heating and charging electric cars, were subjected to variable hourly price signals with a one-day advance notification over the course of three winter months. The study reveals that households reduced their electricity demand by, on average, 2.92% in hours with high prices, and the reduction did not diminish significantly after repeated interventions. Moreover, an increased response could be observed for price signals with a short peak price period and when prices exceeded a threshold of 15 NOK/kWh. These results suggest that despite the limited potential of manual demand response from households, it can still be relied upon and utilised to enhance power system operations and planning. Additionally, to fully exploit its potential, it is recommended to enhance price responsiveness through tailored price information and by incentivising investments in automatic response and energy storage.