The Effect of Utility Cost Reduction - Modelling residential heating demand under energy price fluctuations

Abstract

Hungarian households spend a significant part, 20% of their income to energy. One of the most important energy services is heating because of the cold winters. The efficiency of primary energy use for heating purposes is very low, 80% of the primary energy could have been spared with proper retrofit. The penetration of natural gas in the residential heating is approximately 60%. 80% of the natural gas will be imported from Russia. The Hungarian government started a utility bill decrease process, cutting the energy bills by 20% in 2013. This provides a unique research option to examine the impact of energy-price decrease on the heating behaviour of households and on the natural gas demand. The system dynamic model simulates the natural-gas demand of households in dependence of the external temperature, the energy efficiency features of the buildings, the income of the household and the subjective expectations of the inhabitants regarding the room-temperature. The model provides a framework for testing energy tariff systems, price incentives and energy efficiency measures.