Note on estimating effectiveness of demand management

Abstract

This article suggests a method for estimating the effectiveness of electricity demand management and improving the accuracy of future peak load forecasting. The measurement accuracy is essential for deciding the optimal size of power plants. The measurement issue has been very controversial because the real effectiveness of demand management policy is not observable. This article uses the state space modelling technique to capture the effectiveness of the demand management. From the application of this technique to the Korea's case, this article finds that the effectiveness of the policy relatively becomes smaller than before and that the peak load forecast should be adjusted. This enhanced measurement technique will help the Korean government to have the theoretical base for the national energy plan in the future.

Keywords:

• peak load
• electricity demand management

JEL Classification:

• Q4
• D4
• H5