The impact of daylight saving time on electricity consumption: Evidence from southern Norway and Sweden

Abstract

This paper examines the impact of daylight saving time (DST) on electricity consumption in southern Norway and Sweden. As DST was implemented in both the countries in 1980, we do not have a clear counterfactual in the form of a control period to identify the impact of DST directly with before and after or with and without analysis. This problem in the study is resolved by using “equivalent day normalization technique” to identify the impact of DST. The difference-in-difference (DID) average treatment effects model suggests an annual reduction of at least 1.0 percent in electricity consumption for both Norway and Sweden due to DST. The average annual electricity consumption reduction corresponding to DST effects equals 519 and 882 GWh for southern Norway and Sweden, resulting in an annual financial saving of 16.1 million Euros and 30.1 million Euros, respectively. The distribution of treatment effects across different hours of the day indicates a small but significant reduction in electricity consumption during the morning and a steep decline during the evening hours in both countries.