Do households react to variable power prices? - Results from a Norwegian pricing experiment

This paper investigates if and how households change their electricity demand when faced with variable power prices and if this could lead to lower peak demand in the transmission grid. The aim is to improve knowledge of implicit demand response of highly electrified households in cold climates. A pricing experiment was performed with artificial variable prices for electricity and real economic consequences for the participating households. The experiment was conducted in Norway with price signals of 5 NOK/kWh and 10 NOK/kWh combined in four different price profiles. The results show that, on average, the households responded by reducing their electricity consumption by 7.2 % in hours with high prices. In addition, the results showed that the magnitude of the price signal only had a minor effect on the response. The findings suggest that households are price-sensitive, but a possible contribution to lower peak demand is still uncertain due to limited data from the experiment.