Daylight Time and Energy Evidence from an Australian Experiment: Daylight Time and Energy Evidence from an Australian Experiment Ryan Kellogg
Presentation October 2007
Department of Economics - University of Washington Hendrik Wolff
Daylight Saving Time (DST): A tool for energy conservation?: Daylight Saving Time (DST): A tool for energy conservation? Several countries debate about DST:
- USA Energy Policy Act of 2005
”Title I Extends DST by four weeks to reduce energy consumption by the equivalent of 100,000 barrels of oil for each day of the extension.”
- Australia, UK, Japan, Korea and others are considering extending DST to curb GHG emissions
We use a quasi-experiment to assess whether extending DST saves electricity: We use a quasi-experiment to assess whether extending DST saves electricity
2000 Sydney Olympic Games:
- two states in Australia began to observe DST two months earlier than usual
Preview of main result:
Contrary to previous DST-literature: Extending DST does not save electricity
Slide5: “I say it is impossible that people lived so long by the
smoky, unwholesome, and enormously expensive
light of candles,
if we had as much pure light of the sun for nothing.”
– Benjamin Franklin, Paris, 1784 –
Slide6: “I say it is impossible that people lived so long by the
smoky, unwholesome, and enormously expensive
light of candles,
if we had as much pure light of the sun for nothing.”
– Benjamin Franklin, Paris, 1784 –
Misallocation causes Paris
to consume an additional
64 million pounds of tallow and wax
annually.
Slide9: Artificial Lighting Sleep
Prior studies find: extending DST into “March” saves electricity by 0.6%-3.5%: Prior studies find: extending DST into “March” saves electricity by 0.6%-3.5% Studies are directly used by Governments to decide on DST extensions USA: 1%
New Zealand: 3.5%
Australia: 1%-3.5%
California: 0.6%
Ontario, Canada: 2.2%
However, studies are based on simulations and extrapolations, rather than empirical evidence
Nixon 1973: Emergency DST Energy Conservation Act: Nixon 1973: Emergency DST Energy Conservation Act
Observational Study finds 1% savings based on ‘73-’75 DST extension in the USA
However…
…technology changed
…potentially confounded
Yellow: Regions observing DST as of 2006: Yellow: Regions observing DST as of 2006
Road Map: Road Map
Background on the event and graphical results
Treatment effect estimation
Testing prior DST simulation models
Conclusions
Typically 3 states observe DST: Typically 3 states observe DST Western Australia Queensland South Australia (SA) Northern Territory New South Wales (NSW) Victoria
Typically: SA, NSW, and VIC observe DST from October to March
VIC
In 2000 NSW and VIC are “treated” with 2 months extended DST: In 2000 NSW and VIC are “treated” with 2 months extended DST Western Australia Queensland South Australia (SA) Northern Territory New South Wales (NSW) Victoria
Typically: SA, NSW, and VIC observe DST from October to March
In 2000:
NSW and VIC start DST two months earlier
VIC
Policy change was not prompted by intent to conserve energy: Policy change was not prompted by intent to conserve energy Western Australia Queensland South Australia (SA) Northern Territory New South Wales (NSW) Victoria
Cited rationales
Fewer shadows on the fields improve TV broadcasting
Shift visitors between stadia in daylight
VIC
Policy change was not prompted by intent to conserve energy: Policy change was not prompted by intent to conserve energy Western Australia Queensland South Australia (SA) Northern Territory New South Wales (NSW)
Cited rationales
Fewer shadows on the fields improve TV broadcasting
Shift visitors between stadia in daylight
VIC Olympic events confound NSW:
International tourism
Construction activities
Treated state: VIC, Control state: SA Control State Melbourne Adelaide Treated State
Time Line in 2000: Time Line in 2000 August 27: DST starts in VIC September 15 – October 1: Sydney Olympics in NSW October 29: DST starts in SA
Time Line in 2000: Time Line in 2000 August 27: DST starts in VIC September 15 – October 1: Sydney Olympics in NSW October 29: DST starts in SA The Olympic events present a potential confound in VIC
Increased TV ratings, Carnival events around public mega screens
Drop Olympic period from treatment period in VIC
VIC: Treatment I VIC: Treatment II
SA (control state) shows no effect of DST extension: SA (control state) shows no effect of DST extension
Average half hourly electricity demand during the treatment period
Average half hourly electricity demand during the treatment period : VIC (treated state) shows regular load pattern in control years Average half hourly electricity demand during the treatment period
VIC 2000 shows intra-day shift in electricity load : VIC 2000 shows intra-day shift in electricity load
Dataset: 1999-2005 panel of: Dataset: 1999-2005 panel of half hourly electricity demand & wholesale prices
hourly weather
Temperature, Precipitation, Wind, Pressure, Sunshine, Humidity
Day of week, school-vacation, holidays, “transition vacation days”
Employment, Gross-State-Product, population
“Difference in Differences” Mechanics: “Difference in Differences” Mechanics Control structure is two-fold:
(a) spatial across states
controls for differences between states
(b) temporal over years
controls for any shock on the national level
Standard DID : Standard DID
Augment standard DID model by estimating “triple-DID” Treatment Effect Model: Augment standard DID model by estimating “triple-DID” Treatment Effect Model
Triple-DID control structure is three-fold:
(a) Spatial across states
(b) temporal over years
(c) temporal within days using early afternoon hours k …12:00-14:30 as “within” controls
With triple-DID: we don’t depend on
nearby months and
Seasonal variations
Model robust against shocks affecting the level of any day
(demand is function of 1800 variables)
Half hourly treatment effects of extending DST on electricity use : Half hourly treatment effects of extending DST on electricity use The estimated effect of extending DST in VIC, disaggregated by half-hour, with 95% confidence intervals. Standard errors are clustered by day.
Testing the Electricity Saving Hypothesis Percentage change due to DST: Testing the Electricity Saving Hypothesis Percentage change due to DST New Zealand
Testing the Electricity Saving Hypothesis Percentage change due to DST: Testing the Electricity Saving Hypothesis Percentage change due to DST New Zealand Canada (Ontario)
Testing the Electricity Saving Hypothesis Percentage change due to DST: Testing the Electricity Saving Hypothesis Percentage change due to DST New Zealand USA Canada
Testing the Electricity Saving Hypothesis Percentage change due to DST: Testing the Electricity Saving Hypothesis Percentage change due to DST New Zealand California Canada USA
Testing the Electricity Saving Hypothesis Percentage change due to DST: Testing the Electricity Saving Hypothesis Percentage change due to DST New Zealand Australia Canada USA California
Testing the Electricity Saving Hypothesis Percentage change due to DST: Testing the Electricity Saving Hypothesis Percentage change due to DST New Zealand Australia Canada USA California
Testing the Electricity Saving Hypothesis Percentage change due to DST: Testing the Electricity Saving Hypothesis Percentage change due to DST New Zealand weekdays Canada USA California weekends
Value of results: Value of results First quantitative study to show that DST does not decrease electricity consumption, contradicting prior research
Australia considers extending DST to cut GHG emissions
Can we transfer the results to the U.S.?
San Francisco: latitude & climate similar to Melbourne
Next we examine the “California Simulation model”
California identifies three benefits of extending DST: California identifies three benefits of extending DST
Extended DST…
(1) …saves non-renewable resources
Electricity use decrease
(2) …increases consumer welfare
Reduction in peak evening demand: price decreases
CA benefits up to $1.3 billion annually
(3) …helps to avoid extreme events
Likelihood of blackout decreases
CEC 2001 Simulation : CEC 2001 Simulation
Simulation unable to predict intraday-change in demand: Simulation unable to predict intraday-change in demand
Treatment in Victoria 2000 leads to a price spike: Treatment in Victoria 2000 leads to a price spike MW
Conclusions I: Conclusions I
...none of the “three benefits” of extended DST could be confirmed. The extension:
- does not save electricity
- increases prices
- increases the critical demand spikes
…findings are of policy interest since Australia considers re-introducing the 2000-DST-schedule to curb GHG emissions
…results suggest U.S. will not benefit from extending DST
…extending DST is not a quick fix for energy conservation.
Slide43: U.S. Energy Bill of 2005:
“If the study does not report adequate savings,
Congress should consider
to return to the original Daylight Savings Time schedule.”
Policy Recommendation:
….Pull out DST legislation from Energy Bills
….Health Benefits? Business?
Conclusions II
Penetration trends of air conditioning by state: Penetration trends of air conditioning by state
Characteristics of Generators: Characteristics of Generators Two Issues:
- “Is Real Time Pricing Green?: – Impacts of Demand Variance” (Holland & Mansur, 2004)
- Forecasting Error, DST learning
National Electricity Market, Australia: National Electricity Market, Australia
Settlement of electricity prices in VIC, NSW, QLD and SA : Settlement of electricity prices in VIC, NSW, QLD and SA
demand price: demand price M Tu W Th F Sa Su M T W T F M T W T F ------------- School Vacation ----------
Table 2: Summary statistics of data used from 1999 to 2001, 27 August to 27 October: Table 2: Summary statistics of data used from 1999 to 2001, 27 August to 27 October
Selection of the afternoon hours: Selection of the afternoon hours
Equator: Equator
Slide56: Melbourne
Slide57: Melbourne
Slide58: Sleep Artifical lighting
Slide61: Sunshine Hours during Standard Time
September, Melbourne
Slide62: Sunshine Hours during DST extension
September, Melbourne
San Francisco: San Francisco
Melbourne: Melbourne