Electrification: Conversion Woes

The Impact of Technology and Price on Market Share for Electricity and Natural Gas in Residential Heating Markets

With market forces bent on electrification, natural gas distribution companies may have to contend with a less friendly residential market. This article examines the effects of technology and price on historical trends in market share for electricity and natural gas in residential heating markets. Inter-fuel elasticity of substitution is estimated via econometric analysis of state-level panel data from 2001 to 2017. The results suggest that market shares are insensitive to relative prices in the short run. In the long run, the response tends to be material and statistically significant.

Originally published in the Electricity Journal. Download your copy below.