Residential Energy Reduction Requires Changing Customer Behavior

At the core of any utility demand response (DR) or energy efficiency (EE) program is one simple fact: good results depend on changing people’s behavior.

That’s challenge, because habits around energy use are deeply ingrained in all of us. Some people are fastidious about switching off the lights when going out; others not so much.

This second group takes energy for granted. When they turn on the lights, they aren’t thinking about electricity; they are thinking, “I need to be able to see” or “I hope I don’t trip over anything.”

The challenge for utilities, then, is to get these folks to take notice and begin to care about energy use.

Most DR and EE programs are either opt-in or opt-out; each affects customer behavior differently.

In an opt-in program, the customer agrees to participate. The utility normally offers to install a thermostat or control switch to manage energy use during peak times. An analysis conducted a few years ago (detailed in a white paper from Franklin Energy) shows that these direct feedback programs result in good savings, ranging from 3% to 7% .

The downside is that the pool of participants is likely to be small, as it is a self-selected group. The fact that customers agree to participate is a strong indicator that they already care somewhat about energy use.

An opt-out program targets a wider group of participants, ideal for influencing behavior. A typical approach might be to send a report to a group of utility customers in the same neighborhood, documenting each household’s energy use .

This approach leverages the power of social norms, as noted in the Franklin Energy white paper:

“A powerful finding from behavior science is at the core of this program; individuals are motivated much more by their perceptions of what other people do and find acceptable than they are by other factors such as the opportunity to save money or conserve resources, contrary to even their own perceptions of motivation. “

The authors note that one group of report recipients saved about 2% more energy than a control group. These findings have been validated by savings verification reports for many programs run by utilities.

In the end, a mix of approaches will give utilities the best results–not only for energy efficiency programs but also for demand response. New devices such as Internet-connected thermostats that give customers the ability to actively control their energy use have the potential to deliver even higher opt-in rates, especially if utilities create effective programs and clever ways to evaluate the results.

Clearly, it’s going to take a mix of techniques to address the numerous scenarios that lead to a reduction in energy consumption. In forthcoming posts, my colleagues and I will offer tips for designing and delivering programs that will appeal to unique customers groups, evaluating the results, and ensuring the security of customer information. Together I’m confident we can reach some ambitious energy reduction goals.

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