How much shift in demand? Findings from a field experiment in Germany

In this paper we evaluate the effects of time of use (TOU) pricing in a field experiment in Germany on residential peak and off-peak demand, which involves more than 1,500 households in the TOU treatment and the control group. The TOU experiment lasted for six months and the ratio of peak-to off peak prices was 177 %. Results from econometric difference-in-difference analyses suggest that TOU pricing corresponds to average percentage reductions in peak-demand of 6 % to 7 %, for a household in the TOU treatment group. In comparison, the TOU tariff was not found to affect off-peak demand. Households mainly respond to TOU tariffs by shaving peak demand, but not by shifting demand from peak periods to off-peak periods. Thus, TOU pricing also lowers total electricity use. Our findings further suggest that there is no difference in the effects of TOU pricing between weekdays and weekends. Finally, we find no differences in the effectiveness of TOU pricing over time.