Three Essays on Price and Weather Responses of Commercial and Industrial Customers in Hawaii.

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2018-08

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The electricity market is now facing a crossroad, due to rises in new technologies such as energy efficient appliances, renewable energy systems, and smart meters. The introduction of renewable energy resources has put pressure on the traditional grid. The energy market must undergo drastic changes in terms of demand and supply side management to meet the rise in new technologies. This includes new pricing schemes to signal customers to avoid consuming energy during peak times, demand response programs, and energy efficiency. However, increasing levels of behind the meter technology has made customer demand less transparent, and harder to implement demand side programs without fully understanding how consumers respond to prices or weather changes. Hence, there is increased need to improve existing models of energy demand modeling. Because we do not know how commercial and industrial (C&I) sector demand, this study tries to characterize consumer energy demand for the C&I sectors. Through the analysis this paper finds that certain customers are indeed more price responsive than others, certain sectors are temperature sensitive, and there are winners when an alternative pricing structure is introduced. This paper makes several contributions to the existing literature. First, consumption behavior of sectors within the C&I sector is unclear as studies on the effects of price energy consumption of C&I sectors are sparse when the share of end use electricity is significantly larger than the residential sector. Hence, C&I customers are ideal targets for demand side management practices because they have a larger contribution to the system compared to residential customers. Second, this paper reveals which types of customers experience benefits in the form of decreased bills under marginal cost pricing. Finally, this paper helps understand how C&I customers alter their electricity consumption to a response in temperature and price.

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