Using Behavioral Nudging to Supercharge Energy Efficiency Programming
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- Jan 16, 2020 10:38 pm GMT
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It is well known that energy efficiency can slash energy use and greenhouse gas emissions by 50% without having to radically change how we do things. In this article, I’d like to talk more about how behavioral nudging can play a part in this business of saving the planet.
Behavioral programs are typically cheaper and easier to implement than other technology-oriented measures, mostly because they rely on empowerment versus incentives. Activities that apply behavioral nudges vary and can include:
Home energy reports comparing your consumption to your neighbors;
Alerts for high energy usage for consumers and businesses;
Real-time feedback on energy use in your home; and
Peak usage notifications and time of use pricing.
Behavioral nudges have been in the utility marketplace for some time, and as such, there is no shortage of evidence for their effectiveness. One of the first behavioral nudges widely utilized – the home energy report – is still in play today with an impact on consumption ranging from 1% to 2%. While that may not seem significant, a 1% impact over 1,000,000 households is equivalent to the energy needs of 10,000 households. That’s the undeniable power of behavioral nudging.
Some of the biggest measured impacts of behavioral nudging have been energy usage messaging combined with pricing variation, which show an efficiency impact of 3% to 5%.1
It’s not always straightforward though, there are environmental and cultural factors that impact the effectiveness of behavioral nudges. For instance, political orientation can impact how a customer may respond to a home energy report. They are two to four times more effective for reducing electricity usage with politically liberal than with conservative households. Energy type also matters, as typical home energy reports that have worked well for reducing electricity consumption can lose almost half the impact when applied to natural gas customers.
That brings us to a recent study that set out to measure the impacts on consumption by comparing different types of messaging on utility bills. The experimental pilot took place in Medicine Hat, Alberta – a politically conservative city of about 63,000. For the experiment, a third-party evaluation team used a randomized control trial to test the impact of visual heat loss data against traditional home energy reports (consumption comparison) as well as a control group that received no behavioral nudge messaging. The treatment groups (seen in the graphic below) were made up of approximately 4,600 homes with an even distribution of average consumption, building size, and building value.
The treatments in Group 2 and 3 were displayed with social norm message (i.e. compared the home to others in the community) shown on page four of utility bills. The messaging was combined with information on potential savings as a result of lowering heat loss/consumption.
The evaluation – completed by academic researchers at the University of Ottawa and Carlton University – found that Group 2 (heat loss imagery) demonstrated a 2.6% reduction in consumption for every $100 that a customer was told they could save while Group 3 (consumption comparison) demonstrated only a 1.2% reduction in consumption for the same amount of savings. Looking at this in more detail:
a.) Customers with the mean potential savings of $150 per year reduced their natural gas usage by an average of 3.9% in the group shown heat loss imagery, and only 1.8% in the group shown the consumption comparison graph.
b.) When further controlling for low consumption homes, natural gas savings for every $100 in potential savings increased from 2.6% to 7.5% in the group shown heat loss imagery.
The message from this experiment is clear – if we want to supercharge the impact of behavioral programs, providing visual and comparable information on home heat loss is a great proven method to increase savings and strengthen traditional home energy reports. If you'd like to read the full academic report, please click here.
Article Written by Darren Jones – CEO, MyHEAT Inc.
1 Maya Papineau & Nicholas Rivers, Retrieved Nov 2019. "Visualizing Energy Efficiency: A Randomized Controlled Intervention," Carleton Economic Papers 19-10, Carleton University, Department of Economics.