Heterogeneity in price responsiveness for residential space heating in Germany

More than 80% of the energy expenditures of private households in Germany are spent on space heating and hot water preparation. This creates opportunities for policymakers trying to influence energy consumer behavior. However, for these measures to be effective and efficient, the factors that determine energy usage need to be known. In this paper, we identify the determinants of heating and hot water expenditures for German households, using a panel dataset derived from yearly residential household surveys covering the years 1996-2014. Furthermore, we test for heterogeneity between households using different methods. For the full sample, we find an own-price demand elasticity of heating expenditures ranging from 0.573 to 0.690. A large number of technical and socio-demographic factors are significant determinants of energy use. Additionally, we discover significant heterogeneity in price elasticity between different socioeconomic groups. Our findings have implications for evaluating the effectiveness of policy measures that target influencing energy use across different groups of consumers.