Acceptability of Price and Volume Risks by Residential Electricity Consumers

Based on a discrete choice experiment with 582 households in Switzerland, we find, that about 30% of the consumers focus on price risks (cost focus) when they choose an electricity tariff, while 70% of the customers are more worried about volume risks (comfort focus). Customers with a cost focus, prefer contracts with low price risk and automatic load control, even though these contracts increased their volume risk, while customers with a comfort focus are unlikely to choose a contract that exposes them to either price or volume risks. A stylized cost-benefit analysis suggests that automatic load-control of individual devices could minimize system costs, as the higher automation cost compared to price-based approaches would be offset by the increased peak-demand reductions. While customers with a cost focus would select such a tariff, engaging customers with comfort focus will require further efforts to overcome their aversion to direct load control