Better information on residential energy use may deter investment in efficiency: case study of a smart metering trial

McCoy, Daire and Lyons, Sean (2014): Better information on residential energy use may deter investment in efficiency: case study of a smart metering trial.

Abstract

Smart metering allows electricity utilities to provide consumers with better information on their energy usage and to apply time of use tariffs. These measures have been shown to reduce electricity consumption and induce time-shifting of demand. Less is known about how they affect residential energy efficiency investment behaviour. Using data from a randomised-controlled trial on a sample of 2500 Irish consumers we show that exposure to time of use pricing and better information over a 12 month period can have the unintended effect of reducing investment in energy efficiency measures within the home.

• Item Type: MPRA Paper
• Language: English
• Keywords: Randomised-controlled trial; Smart-metering; Energy efficiency adoption
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q55 - Technological Innovation

References

Allcott, H. & Greenstone, M. (2012), 'Is There an Energy Efficiency Gap?', Journal of Economic Perspectives 26(1), 3-28.

Allcott, H. & Mullainathan, S. (2010), 'Behavioral science and energy policy', Science 327(5970), 1204-1205.

Blumstein, C.; Krieg, B.; Schipper, L. & York, C. (1980), 'Overcoming social and institutional barriers to energy conservation', Energy 5(4), 355--371.

Brook-Lyndhurst (2011), 'Exploring Catalyst Behaviours. A research report completed for the Department for Environment, Food and Rural Affairs by Brook Lyndhurst'.

Carroll, J.; Lyons, S. & Denny, E. (2013), 'Reducing Electricity Demand through Smart Metering: The Role of Improved Household Knowledge', Technical report, Trinity College Dublin, Department of Economics.

CER (2011), 'Commission for Energy Regulation, 2011b. Results of Electricity Cost-Benefit Analysis, Customer Behaviour Trials and Technology Trials. Smart Metering Information Paper 4', Commission for Energy Regulation, Available: http://www.cer.ie.

Dubin, J. A. & McFadden, D. L. (1984), 'An econometric analysis of residential electric appliance holdings and consumption', Econometrica: Journal of the Econometric Society, 345--362.

Faruqui, A.; Sergici, S. & Sharif, A. (2010), 'The impact of informational feedback on energy consumption. A survey of the experimental evidence', Energy 35(4), 1598-1608.

Festinger, L. (1962), A theory of cognitive dissonance, Vol. 2, Stanford university press.

Golove, W. H. & Eto, J. H. (1996), 'Market barriers to energy efficiency: a critical reappraisal of the rationale for public policies to promote energy efficiency', LBL-38059. Berkeley, CA: Lawrence Berkeley National Laboratory.

Jaffe, A. B. & Stavins, R. N. (1994), 'The energy-efficiency gap What does it mean?', Energy policy 22(10), 804-810.

Metcalf, G. E. & Hassett, K. A. (1999), 'Measuring the energy savings from home improvement investments: evidence from monthly billing data', Review of economics and statistics 81(3), 516--528.

Ruderman, H.; Levine, M. D. & McMahon, J. E. (1987), 'The behavior of the market for energy efficiency in residential appliances including heating and cooling equipment', The Energy Journal 8(1), 101--124.

Thogersen, J. (2004), 'A cognitive dissonance interpretation of consistencies and inconsistencies in environmentally responsible behavior', Journal of Environmental Psychology 24(1), 93-103.

Thogersen, J. & Olander, F. (2003), 'Spillover of environment-friendly consumer behaviour', Journal of Environmental Psychology 23(3), 225-236.

Whitmarsh, L. & O'Neill, S. (2010), 'Green identity, green living? The role of pro-environmental self-identity in determining consistency across diverse pro-environmental behaviours', Journal of Environmental Psychology 30(3), 305-314.