Air-conditioning Australian households: The impact of dynamic peak pricing

Abstract

International mandates for smart metering are enabling variable and real-time pricing regimes such as dynamic peak pricing (DPP), which charges 10-40 times the off-peak rate for electricity during short periods. This regime aims to reduce peak electricity demand (predominantly due to increase in residential air-conditioning usage) and curb greenhouse gas emissions. Although trials indicate that DPP can achieve significant demand reductions, particularly in summer, little is known about how or why households change their cooling practices in response to this strategy. This paper discusses the outcomes of a small qualitative study assessing the impact of a DPP trial on household cooling practices in the Australian state of New South Wales. The study challenges common assumptions about the necessity of air-conditioning and impact of price signals. It finds that DPP engages households as co-managers of their cooling practices through a series of notification signals (SMS, phone, in-home display, email, etc.). Further, by linking the price signal to air-conditioning, some householders consider this practice discretionary for short periods of time. The paper concludes by warning that policy makers and utilities may serve to legitimise air-conditioning usage and/or negate demand reductions by failing to acknowledge the non-rational dynamics of DPP and household cooling practices. © 2010 Elsevier Ltd.