Does Daylight Saving Time Save Energy? Evidence from Slovakia

• Název práce v češtině: Šetrí letný čas energiu? Dôkaz zo Slovenska
• Název v anglickém jazyce: Does Daylight Saving Time Save Energy? Evidence from Slovakia
• Klíčová slova: letný čas, difference-in-difference, energia, Slovensko
• Klíčová slova anglicky: daylight saving time, difference-in-difference, energy, Slovakia
• Akademický rok vypsání: 2016/2017
• Typ práce: bakalářská práce
• Jazyk práce: angličtina
• Ústav: Institut ekonomických studií (23-IES)
• Vedoucí / školitel: prof. PhDr. Zuzana Havránková, Ph.D.
• Řešitel: skrytý - zadáno vedoucím/školitelem
• Datum přihlášení: 11.05.2017
• Datum zadání: 31.05.2017
• Datum a čas obhajoby: 11.06.2018 09:00
• Místo konání obhajoby: Opletalova - Opletalova 26, O105, Opletalova - místn. č. 105
• Datum odevzdání elektronické podoby: 02.05.2018
• Datum proběhlé obhajoby: 11.06.2018
• Oponenti: Mgr. Petra Valíčková, Ph.D.

Seznam odborné literatury

(1) Aries, M. B. C. & Newsham, G. R. (2008). Effect of daylight saving time on lighting energy use: A literature review. Energy Policy 36(6): pp. 1858–1866.
(2) Fischer, U. (2000). Does the summer time help to save energy? (in German: Hilft die Sommerzeit beim Sparen von Energie?). Licht 52: pp. 574-577.
(3) Havranek, T., Herman, D. & Irsova, Z. (2016). Does daylight saving save electricity? A meta-analysis. IES Working Paper Series 2016/24, Charles University, Prague.
(4) Hill, S. I., F. Desobry, E. W. Garnsey, & Y. F. Chong (2010): The impact on energy consumption of daylight saving clock changes. Energy Policy 38(9): pp. 4955-4965.
(5) Kandel, A. & Metz, D. (2001). Effects of daylight saving time on California electricity use. California Energy Commission Staff Report, Sacramento.
(6) Kellogg, R. & Wolff, H. (2008). Daylight time and energy: Evidence from an Australian experiment. Journal of Environmental Economics and Management 56(3): pp. 207–220.
(7) Kotchen, M. J. & Grant, L. E. (2011). Does Daylight Saving Time Save Energy? Evidence from a Natural Experiment in Indiana. The Review of Economics and Statistics 93(4): pp. 1172–1185.
(8) Mirza, F. M. & Bergland, O. (2011). The impact of daylight saving time on electricity consumption: Evidence from southern Norway and Sweden. Energy Policy 39(6): pp. 3558–3571.
(9) Wanko, I. & Ingeborg, S. (1983). Die Einfuhrung der Sommerzeit in Osterreich: Eine energiewirtschaftliche Betraucht der Ausgangsvoraussetzungen und Auswirkungen. Technical report, Economic University in Vienna.
(10) Zellner, A. (1962). An efficient method of estimating seemingly unrelated regressions and tests of aggregation bias. Journal of the American Statistical Association 57(298): pp. 348-368.

Předběžná náplň práce v anglickém jazyce

Research question and motivation
Daylight saving time (DST) policy in Europe has been originally introduced for the purposes of energy savings. As of today, all states of the European Union synchronize their clocks twice a year following the same directive (2000/84/EC). Recently, a number of EU members raised the question whether the harmonization of summertime still provides the presumed benefits, calling for an abolishment of the policy. The existent academic literature on this topic is relatively scarce (see, for example, Havranek et al. 2016) and yields not only discordant evidence on the size of the effect but also on the direction of the effect (Kotchen & Grant 2011, for example, find that DST increases electricity demand). Few empirical studies provide an analysis for EU states, such as Hill et al. (2010) for the United Kingdom, Fisher (2000) for Germany, Wanko & Ingeborg (1983) for Austria, or Mirza & Bergland (2011) for Norway and Sweden; but many European electricity markets have not been analyzed, yet. The aim of my thesis is to bridge the gap for one of the missing national markets, Slovakia, and to determine whether DST has a positive or negative effect on the electricity consumption in Slovakia. Therefore, using the evidence from Slovak market, I will tackle the research question of whether the daylight saving time policy indeed saves the energy in Slovakia.

Contribution
To the best of my knowledge, there has been no study on DST effect in Slovakia conducted, so far. The main contribution of my thesis will thus be an original and comprehensive analysis on whether the DST policy in Slovakia saves the electricity or not. My results can be potentially further used as a supporting academic evidence in the ongoing European Parliament discussions on the implications of DST policy among the member states.

Methodology
There are several methodological approaches on how to estimate the DST effect: most of the studies use either regression analysis or simulation techniques. The simulations are based on modelling the electricity flows within a building and extrapolating the model to a more aggregate level. Given the data availability for Slovak electricity market I am left with the econometric approaches.
In general, the authors regress the electricity consumption on a set of control variables including the treatment effect which represents a group of data where DST applies. First, my thesis will utilize the data on hourly loads for the period of 2006-2015 from the ENTSO-E database published online by the European Network of Transmission System Operators, aggregated at the country level. The potential for improvement here is to gain the access to a more disaggregate datasets, possibly at the industrial, commercial, or household level (currently unavailable). Secondly, for a set of explanatory variables I will use historical hourly weather data provided by the Slovak Hydrometeorological Institute which include, apart from temperature, other consumption-relevant factors such as humidity, air pressure, precipitation, or the intensity of sunlight. Based on the final aggregation of the consumption data, other than weather explanatory variables might be considered for inclusion.
At this stage of research, I intend to follow Mirza & Bergland (2011) and use the difference-in-difference approach to estimate the DST effect. The difference-in-difference approach is based on the analysis of two different groups of historical data: the consumption affected and the consumption unaffected by the introduced policy. The obvious difficulty rises from the fact that we do not have data before the policy introduction at disposal (DST policy was introduced in Slovakia in 1979 with 6-months long summer time, since 1996 the prolongation to 7-months was introduced based on the common EU directive). For this reason, following Kotchen & Grant (2011) and Mirza & Bergland (2011), I intend to use the “equivalent day normalization” technique which considers the morning and evening hours as DST-affected, and midday and midnight hours as DST-unaffected. This distinction allows me to estimate the differences in the difference between the influenced and un-influenced periods.
As a possible robustness check to the main estimation outlined above, I would apply the approach of Kandel & Metz (2001) who use a simplified simulation technique based on the regression analysis to conduct their estimation: they model a system of 24 linear equations, one for every hour of the day and estimate the system using iterated seemingly unrelated regressions approach (Zellner 1962). This method allows the relationship between the dependent variable (electricity consumption) and independent variable (for example temperature) to vary throughout the day, while considering the correlation between energy use over the hours of the day.

Outline
1. Introduction of the DST and motivation
2. Literature review
3. Data and estimation techniques
4. Empirical results and discussion
5. Conclusion
6. References