How (In)elastic is the short-run demand for electricity?

This paper examines how the aggregate demand for electricity responds to changes in hourly wholesale market prices. I focus on a hydropower-rich country and use data on imported wind energy and accumulated precipitation as instruments for price. Using data from Switzerland from 2016 to 2023, I find that both instruments have a strong and significant price-depressing effect, and I estimate the price elasticity of aggregate demand to be − 0 . 1 . However, this responsiveness is entirely driven by the consumption of storage systems and power plants, while end-user demand remains perfectly inelastic to price fluctuations in the short-run. • Aggregate demand shows limited responsiveness to hourly price fluctuations. • Responsiveness entirely depends on consumption by power plants and storage systems. • End-user electricity demand is perfectly inelastic in the short-run. • Results are robust to the choice of supply shifter used as a price instrument.