The Effect of Demand Response on Electricity Consumption in Japan

The main purpose of this study is to investigate, by using regressions analysis, the DR effect on households' electricity consumption. We employ three kinds of estimation models: a pooled OLS model, a random effect model, and a fixed effect model. Major results are as follows. First, the DR scheme clearly reduces electricity consumption. As the peak-time price of electricity increases by 20 yen/kWh in the form of TOU and CPP, electricity consumption decreases by about 8.1% at sample mean. However, consumption after DR tends to increase, most likely due to the rebound effect. Second, the reduction effects of the DR scheme can be strengthened as households' income becomes higher. In contrast, as more people stay at home during the daytime and the temperature rises, the reduction effects of the DR scheme may become weaker. Third, electricity price, household characteristics, and external conditions are significant factors affecting electricity consumption. Fourth, the effects of some DR schemes such as requests to save electricity, TOU, and CPP, can differ largely according to household characteristics and external conditions.