The National Bank of Denmark published a working paper testing whether households reduce electricity consumption when prices are high, a core premise of real-time and time-of-use pricing. Using high-frequency Danish smart meter data, it estimates short-run (hourly) household-level price elasticity and finds that most households show no statistically significant response to price signals, while nearly one third reduce consumption significantly when prices increase. On average, a DKK 1 increase in electricity prices is associated with a 2.6% decrease in demand. The paper also links smart meter readings to administrative records to examine how price responsiveness differs across socio-demographic groups.
National Bank of Denmark 2025-08-28
National Bank of Denmark working paper estimates residential electricity demand falls 2.6% per DKK price rise
The National Bank of Denmark's working paper reveals that while most Danish households do not significantly alter electricity consumption in response to price changes, nearly one-third reduce usage notably when prices rise, with a DKK 1 increase leading to an average 2.6% demand decrease. The study utilizes smart meter data to assess short-run price elasticity and examines variations in price responsiveness across socio-demographic groups.