Energy markets are rapidly changing with smarter, connected, more reliable infrastructure and cleaner generation on the supply side, and more choice, greater control and enhanced flexibility for customers. This paper examines willingness to pay for bundled smart home energy products and information services, using data from a set of two discrete choice experiments that were part of a survey by the regional energy provider of upstate New York. To let the data reveal how preferences are distributed in the population, a logit-mixed logit model in willingness-to-pay space and a combination of observed and unobserved preference heterogeneity was specified and fitted. Results show that residents of Tompkins County are willing to pay more than in other counties for residential storage, and that for home energy management there is an important generational divide with millennials being much more likely to perceive the economic value in the smart energy technologies. The flexible logit-mixed logit estimates provide evidence of important heterogeneity in preferences: whereas most of the population has a positive –albeit rather low– valuation of smart energy products and services, there is a considerable percentage of customers with negative perceptions.
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Willingness to delay charging of electric vehicles
Electrification of vehicles is becoming one of the main avenues for decarbonization of the transportation market. To reduce stress on the energy grid, large-scale charging will require optimal scheduling of when electricity is delivered to vehicles. Coordinated electric-vehicle charging can produce optimal, flattened loads that would improve reliability of the power system as well as reduce system costs and emissions. However, a challenge for successful introduction of coordinated deadline-scheduling of residential charging comes from the demand side: customers would need to be willing both to defer charging their vehicles and to accept less than a 100% target for battery charge. Within a coordinated electric-vehicle charging pilot run by the local utility in upstate New York, this study analyzes the necessary incentives for customers to accept giving up control of when charging of their vehicles takes place. Using data from a choice experiment implemented in an online survey of electric-vehicle owners and lessees in upstate New York (N=462), we make inference on the willingness to pay for features of hypothetical coordinated electric-vehicle charging programs. To address unobserved preference heterogeneity, we apply Variational Bayes (VB) inference to a mixed logit model. Stochastic variational inference has recently emerged as a fast and computationally-efficient alternative to Markov chain Monte Carlo (MCMC) methods for scalable Bayesian estimation of discrete choice models. Our results show that individuals negatively perceive the duration of the timeframe in which the energy provider would be allowed to defer charging, even though both the desired target for battery charge and deadline would be respected. This negative monetary valuation is evidenced by an expected average reduction in the annual fee of joining the charging program of $2.64 per hour of control yielded to the energy provider. Our results also provide evidence of substantial heterogeneity in preferences. For example, the 25% quantile of the posterior distribution of the mean of the willingness to accept an additional hour of control yielded to the utility is $5.16. However, the negative valuation of the timeframe for deferring charging is compensated by positive valuation of emission savings coming from switching charging to periods of the day with a higher proportion of generation from renewable sources. Customers also positively valued discounts in the price of energy delivery.
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- Award ID(s):
- 1632124
- NSF-PAR ID:
- 10209596
- Date Published:
- Journal Name:
- 25th Annual Conference of the European Association Environmental and Resource Economists
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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