Heterogeneity in price responsiveness for residential space heating in Germany
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Heterogeneity in price responsiveness for residential space heating in Germany Hendrik Schmitz1 · Reinhard Madlener1 Received: 3 July 2017 / Accepted: 10 July 2019 © Springer-Verlag GmbH Germany, part of Springer Nature 2019
Abstract More than 80% of the energy expenditures of private households in Germany are spent on space heating and hot water preparation. This creates opportunities for policymakers trying to influence energy consumer behavior. However, for these measures to be effective and efficient, the factors that determine energy usage need to be known. In this paper, we identify the determinants of heating and hot water expenditures for German households, using a panel dataset derived from yearly residential household surveys covering the years 1996–2014. Furthermore, we test for heterogeneity between households using different methods. For the full sample, we find an own-price demand elasticity of heating expenditures ranging from 0.573 to 0.690. A large number of technical and socio-demographic factors are significant determinants of energy use. Additionally, we discover significant heterogeneity in price elasticity between different socioeconomic groups. Our findings have implications for evaluating the effectiveness of policy measures that target influencing energy use across different groups of consumers. Keywords Germany · Heating demand · Heating expenditures · Heterogeneity · Space heating
The research activities and outcomes presented in this paper have been developed as part of the Virtual Institute ‘Transformation – Energy Transition NRW.’ The Virtual Institute encompasses ten renowned research institutes from North Rhine-Westphalia dealing with socioeconomic implications of the energy transition in NRW. It is supported by the NRW Ministry for Innovation, the Energy Research Cluster NRW, and the Mercator foundation. More information is available here: http://www.vi-transformation.de/ en/. Financial support by the NRW Ministry for Innovation (MIWF NRW, Grant No. W 036C) is gratefully acknowledged. Electronic supplementary material The online version of this article (https://doi.org/10.1007/s00181019-01760-y) contains supplementary material, which is available to authorized users.
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Hendrik Schmitz [email protected]
Extended author information available on the last page of the article
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H. Schmitz, R. Madlener
JEL Classification C23 · D12 · Q41
1 Introduction Space heating and hot water preparation accounted for 83.2% of household energy demand in Germany in 2015, making them the two foremost drivers of residential energy consumption. This far outweighs all other domestic applications such as cooking, information and communications technology (ICT), lighting, or cooling (BMWi 2016). Therefore, space heating has a considerable impact on overall energy consumption and, in light of the still dominating fossil fuel technologies used for heating, also on greenhouse gas emissions. Consequently, understanding the determinants of residential energy consumption for heating is high
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