Dynamic demand response to electricity prices: Evidence from the Spanish retail market

The energy transition is driving a significant transformation in the electricity sector, with a focus on demand-side engagement. Using the VAR-VEC model methodology, we explore hourly consumer responsiveness to electricity prices for two distinct consumer groups differentiated by their pricing schemes within the Spanish retail market. The research reveals that consumers under real -time pricing adapt their consumption patterns in response to expected retail price fluctuations, particularly during peak hours. These findings offer valuable insights for policymakers evaluating time-differentiated pricing policies. Additionally, retailers can benefit by incorporating these results into wholesale market bidding strategies and retail market planning.