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An empirical study of energy consumption with a mixture pricing mechanism

2019-06-12

Venue:Room 236, School of Economics, Yuquan Campus

Speaker: Tong Wang, Lecturer in Business Economics and Director, Marketing & Business Analysis

Abstract:

We particularly try to provide an exploratory and tentative analysis on how an economic agent chooses the level of monthly total electricity consumption under the existence of a unique pricing system. Using a rich and unique panel data of citizen’s electricity consumption in Hangzhou, China, we structurally model the electricity con- sumption behavior under the existence of a mixture of two following pricing systems: 1. Increasing block pricing (IBP), for which the marginal price will gradually increase with the total consumption level. 2. Time-of-use pricing system, which refers to the calculation of electricity price in different time periods, and the electricity price is more expensive during peak hours (day) and during valley hours (night). The estimation of such a demand model of electricity consumption allows us to evaluate the impact of counterfactual energy policies. In particular, the specific policies that we seek to evaluate are the changes in the blocks and marginal prices, as recently proposed by the government. Specifically, we aim to estimate the impact of the new proposals that may be introduced and their effect on choices of households during different seasons.