Journal of Energy and Economic Development

Journal of Energy and Economic Development

Evaluation of Increasing-Block Pricing for Residential Electricity: A Case Study of Iran

Document Type : Original Article

Authors
pouyan kiani 1
Maryam Nafisi Moghadam 2
Shahabodin Fuladi Moghadam 3
1 Assistant Professor, Department of energy economics, Niroo Research Institute (NRI), Tehran, Iran
2 Expert of Investment and Financial Affairs, Renewable Energy and Energy Efficiency Organization of Iran (SATBA), Tehran, Iran.
3 MA in Economics, Allameh Tabataba’i University, Tehran, Iran.
10.30503/jeedev.2024.441786.1034
Abstract
In Iran, residential electricity prices are determined by the Increasing Block Pricing (IBP). In this approach, electricity prices increase with consumption as it moves from one block to a higher block. To assess the effectiveness of this policy and analyse the price elasticity of residential electricity demand in Iran, this study utilises data from the 31 provinces of Iran to estimate two models of electricity demand based on average price and marginal price from 2015:3 to 2020:2. For this purpose, this study uses the Dynamic Common Correlated Effects (DCCE) approach. The results show that electricity is inelastic. Moreover, the comparison of coefficients of average price and marginal price shows that the consumer's response to changes in the average price is greater than the marginal price. Therefore, the IBP policy has not performed well regarding electricity demand management.
Keywords
Residential Electricity Demand
Increasing-Block Pricing
Average Price
Marginal Price
Iran
Subjects
Journal of Energy and Economic Development
Volume 1, Issue 3
Autumn 2022
Pages 90-100