Analyzing the energy system impacts of price-induced demand-side- exibility with empirical data

This paper assesses the potential effects on the energy system from a full roll-out of a smart phone app designed to connect household electricity consumers with their consumption and price data. The effects of the app in terms of allowing greater demand-side flexibility on the part of household consumers is estimated based on data from an 18-month field trial involving 1,557 Austrian households. These estimates are given as hourly price elasticities of electricity demand and hourly energy efficiency treatment effects from consumer engagement with the app. In a novel methodological coupling, the econometric estimates are input into the Balmorel energy system model, which is used to analyze future scenarios of full renewable energy deployment in the Austrian energy system. The results demonstrate that the impact of the flexible residential demand for electricity is small but significant to future system costs. The total discounted system cost increases by 20-24% in the renewable energy scenarios, compared to a business as usual scenario, due to heavy investments in renewable generation. However, the reduction in cost in renewable energy scenarios is 4-7% when the observed demand-side flexibilities are considered. The results are subject to several methodological caveats, but they give a clear signal that ICT-enabled demand side flexibility can be an important cost-saving element that should be integrated into the future energy system and considered in system-level models.