Conference Agenda

The residential sector stands out as the main sector where energy consumption directly hinges on individual household decisions which are said to be wildly influenced by climate conditions, particularly temperature. This study focuses on aggregated electricity demand as the sum of these parts: given the occurrence of an increase in the use of cooling devices to adapt to the hotter weather, especially by residential users, what is explored is the effect of temperature on electricity demand. The analysis investigates the existence of a specific shape of the daily load curve suspected to verify as a lagged response to daily temperatures: persistence. While the link between temperature and electricity consumption is broadly established, this analysis focuses on hourly electricity load data in Italy from 2015 to 2020, incorporating distributed lag structures to capture the delayed impact of temperatures. Specifically, the econometric analysis firstly confirms the extant literature by finding evidence of a U-shaped relationship, with temperatures associated with the cooling state having a stronger impact on aggregate electricity demand. But more notably, a persistence effect is identified, wherein electricity consumption remains prolonged for several hours after the occurrence of (high)

temperatures. Not only a contemporaneous effect is found to be significant - with decreasing magnitude the more a lag is far in time - but the cumulative effect of past temperature is supported to be stronger than the pooled effect, the current temperature effect on the current electricity demand. This result supports how much an external stimuli received in the past, even more the sum of all of them, may influence the current aggregated load trend; in that, it carries significant implications for energy policy and grid stability. Recognizing and accounting for lagged electricity demand responses in energy planning can improve power system balance through demand-side management and can also guide investments in energy-efficient cooling solutions. Indeed, even though this study is not intended at uncovering the reasons underlying this particular load shape, the analysis suggests that to the increasing ownership of air conditioning units cannot be attributable the persistence effect, rather to their intensive use. Indeed, while electricity demand is found to be sensitive to moderate temperature changes with high air conditioning penetration, at extreme heat levels a low marginal increase in demand due to ownership is experienced.