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How smart are electricity users with ‘Smart Metering’? A Behavioural Economics experiment

Author:
  • Simon Bager
  • Luis Mundaca
Publishing year: 2015
Language: English
Pages:
Publication/Series: [Host publication title missing]
Links:
Document type: Conference paper
Publisher: International Association for Energy Economics

Abstract english

The purpose of this paper is to examine how behavioural biases affect consumers’ response to energy-use information provided through smart meters (SM). We take insights from behavioural economics and carry out two real-life experiments with SMs and electricity users. The experiments were conducted in Copenhagen (Denmark) to identify and assess the potential of two economic behavioural biases, salience and loss aversion. The results of the first experiment (i.e. installation of SM without further intervention) generally aligned with electricity use reductions found in previous research, and indicate that it may be reasonable to expect a reduction in electricity use in the medium-term (weeks/months) of ~5-7% approximately. Results of the second experiment (i.e. introduction of SM with and without intervention) show that subjecting participants to loss aversion and salience seems to affect their behaviour toward electricity use, as the intervention group reduced their consumption roughly twice as much as the reference group. With due limitations, the results suggest that the delivery of information to energy users needs to take into account not only its pure provision, but how it is designed, framed and presented. At all events, the results and reviewed studies strongly suggest that increased energy efficiency and energy conservation need to be addressed with a mix of policies – not only information schemes or the provision of feedback alone.

Keywords

  • Energy Systems
  • Psychology
  • Economics and Business
  • Behavioural Economics
  • Energy Efficiency
  • Households
  • EU energy policy
  • Smart Meters

Other

38th International Association for Energy Economics (IAEE) International Conference
Published
Luis Mundaca
E-mail: luis.mundaca [at] iiiee.lu.se

Senior lecturer

The International Institute for Industrial Environmental Economics

+46 46 222 02 57

344-A

53


International Institute for Industrial Environmental Economics (IIIEE)

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Visiting Address: Tegnérsplatsen 4,Lund

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