Christina McGranaghan, an assistant professor of applied economics at the University of Delaware, will give the talk, "Taking a Load Off: Experimental Evidence of Preferences for Control with an Application to Residential Electricity Demand," at noon on Wednesday, April 22, in 157 Hosler Building on the Penn State University Park campus. The event is part of a spring seminar series hosted by the Initiative for Energy and Environmental Economics and Policy (EEEPI). Talk is free and open to the public.
About the talk: The share of renewable electricity generation in the United States is rising steadily. While lowering average emissions, this creates new tensions for the grid. In addition to making supply more variable and harder to predict, the timing of solar generation relative to household demand for electricity can lead to more pronounced demand peaks in the afternoon and early evening. Utilities therefore increasingly rely on voluntary demand-response mechanisms such as peak pricing or Direct Load Control (DLC) in order to balance the grid, according to McGranaghan.
"The rising share of renewable electricity generation has led to an increased focus on demand-side mechanisms to balance the grid," said McGranaghan. "For example, DLC contracts allow utilities to curtail the electricity use of participating households at times of system stress."
McGranaghan said that DLC contracts aim to reduce peak electricity demand by compensating consumers for the right to centrally switch off appliances such as air conditioners or water heaters at times of system stress. However, residential participation rates in these programs vary widely.
"I use a novel experimental design to show that intrinsic preferences for control can significantly impact the rewards required to encourage consumers to participate in such contracts," said McGranaghan. "In particular, I test for the existence, magnitude, and attributes of control premia in a lab environment which mimics basic features of the DLC context."
McGranaghan is an experimental economist studying decision making under risk and uncertainty. Her applied work uses experiments to explore decision making in the context of flood risk and unfamiliar environmental goods. Her research uses a combination of experimental and observational methods to gain insights into human behavior; to measure responsiveness to price and policy incentives; and to inform policy design. She received her doctorate in applied economics from Cornell University in 2020.
About EEEPI
Established in 2011, EEEPI operates as a University-wide initiative at Penn State with support from the Earth and Environmental Systems Institute and the Institute of Energy and the Environment. EEEPI seeks to catalyze research in energy and environmental systems economics across the University and to build a world-class group of economists with interests in interdisciplinary collaboration.
