ABSTRACT
In economics, the elasticity of demand describes the relationship between price and the quantity of energy demanded in a given time period. Elasticity is a means of conceptualising and measuring how increases in the price of the supplied good or service correspond to decreases in the quantity of demand. The idea of elasticity is critical because it motivates major changes in energy policy and markets, including reforms aimed at increasing demand side participation, time of use tariffs, and fuel substitution. Underpinning the concept of elasticity is the idea that price is the main factor influencing changes in energy demand over time. This chapter challenges this assumption and points to creative ways of thinking about elasticity by focusing on aspects other than price, such as occupancy, heating and time.
