How did the energy crisis affect household electricity consumption? Assessing electricity demand elasticity in Spanish households

Abstract

Residential electricity demand is widely recognised as structurally inelastic. However, this claim may not hold in the future – at least in most liberalised electricity markets. Among other factors, a higher exposure to volatile electricity prices may lead electricity end user to adapt their consumption to almost real-time contingencies. Therefore, it is necessary for policymakers and market actor to anticipate these changes in end-user behaviour. In this regard, Spain offers an insightful case study for analysing end-user response to electricity prices. Current high penetration of renewable sources and high variability in electricity prices in Spain are key elements that will shape the future electricity systems. In this paper we estimate the evolution of price elasticity of residential electricity demand within the period 2021-2024 in Spain. Our work aims to detect if any variation in elasticity appears due to variation in electricity prices and how retail tariff structure impacts on it. Our findings can contribute to the design of future-proof energy policies.