How much load flexibility can a euro buy? Findings from a contingent valuation experiment with companies in the German commerce and services sector

Abstract Demand-side load management is considered a cost-efficient solution for accommodating growing shares of intermittent renewable electricity production. We employ a double-bounded dichotomous choice contingent valuation (CV) experiment with 275 companies in the German commerce and services sector to estimate the effectiveness of a subsidy to make their ventilation, air conditioning, refrigeration and freezing systems available for automated load management. Our estimates suggest that a given subsidy would unlock more flexible load at lower per MWh subsidy costs from air conditioning compared to ventilation. We find no effect of subsectors and the proposed frequency and duration of the load curtailments on the subsidy level. Subsidy levels in the center of the distribution yield specific subsidy costs that suggest that load management in the commerce and services sector may become a competitive option on the balancing market.