Getting people to change their behaviour is part of the net-zero plan, with residential energy consumption at 20% of total energy demand. How big a part can it play, and how quickly? Traditional methods like economic incentives and providing consumers with raw consumption data don’t always get the results expected. Here, Elisabetta Cornago at the IEA describes behavioural “interventions” that alter daily habits, are cheaper than large-scale structural improvements, and relatively quick to design and implement. “Competitions” that tell customers how their usage compares to their peers. Providing real time consumption data. “Goal setting” that sets targets (and rewards) for lowering consumption. Default settings for appliances that minimise energy usage. There’s more. Some of these interventions can cut usage by 15%. Small gains spread throughout whole populations will add up to big savings. We are at the very early stages of behaviour change, so more trials and careful monitoring of solutions will be needed, says Cornago. The article ends by pointing at case studies.
Whether we are boiling water to make tea, activating a home appliance or relaxing under a hot shower, our daily behaviours and choices at home are important drivers of energy consumption. In 2018, energy consumption from the residential sector represented 20% of the total energy demand in IEA countries.
Individuals and households can adopt a variety of measures to optimise their energy consumption. Changes in our everyday habits can help to reduce home energy bills, lower carbon emissions and ease pressure on the power grid. Modest behaviour adjustments can, over time, yield substantial energy savings on their own.
Residential energy demand can be further reduced through “structural” investments, including upgrades to more energy-efficient appliances and retrofits to existing household equipment. Appropriate policy interventions and programmes can be designed to promote sustainable changes in behaviour and encourage investments in structural improvements.
This article focuses on the potential for enhancing energy efficiency with policies and programmes designed to educate consumers and encourage them to alter their daily habits – without resorting to large-scale structural improvements. This focus is motivated by the observation that interventions aimed at promoting behavioural change are often cheaper to implement relative to policies that seek to encourage investment. Such measures also tend to be relatively quick to design and implement.
What are behavioural interventions and how can behavioural insights enhance the impact of energy efficiency policy?
Behavioural interventions are policies and programmes designed to incorporate the insights of scientists who study human behaviour. The aim of these interventions is to trigger socially desirable behaviours – either by removing barriers to such behaviours, or by creating disincentives to socially damaging ones. The objectives and advantages of behaviourally informed policy-making in the energy realm is discussed in depth in a recent IEA and UsersTCP report.
Traditional incentives don’t always work as expected
Behavioural policy interventions differ from traditional approaches that seek to enhance energy efficiency through economic incentives (such as subsidies for efficient purchases or time-of-use energy pricing), information provision (energy efficiency labels) or regulatory requirements (setting minimum energy performance standards). Such traditional measures assume that users will easily understand the benefits of a policy or programme and react rationally. But the mechanisms that affect the way individuals interpret and act upon information are often complex, and ignoring that complexity can limit policy effectiveness.
Integrating behavioural insights into the policy-making process requires assessing the various biases that affect the way individuals perceive, process, understand or ignore information, prompts and incentives. Meanwhile, designing policies that support changes in consumer habits and that encourage investments also involves identifying possible barriers and finding appropriate solutions to lower or remove them. Sometimes those constraints can be financial, but often they are behavioural: the perceived “hassle factor,” for example, or simple inertia. By expanding their toolkit to include appropriate behavioural levers, policy makers can boost the effectiveness of energy efficiency interventions.
Which behavioural mechanisms prevent flexible and efficient energy use, and what are the best levers to address them?
Our energy consumption at home is shaped by ingrained habits that are hard to change, due to factors like inertia or a subconscious preference for the status quo. Such biases magnify the perceived effort associated with making alternative choices. Personal preferences and social norms also play a role in shaping our routines and behaviours. Understanding how our daily usage of a basic appliance affects our monthly bills can sometimes be complicated, even for those who are environmentally motivated. This lack of awareness can hinder energy saving efforts.
Successful behavioural interventions to bolster energy efficiency have facilitated conservation by using techniques such as feedback mechanisms, which track households’ energy consumption patterns, or targeted prompts, which alert consumers to pay particular attention to their energy usage at peak times. Such interventions make use of multiple behavioural levers (for more in-depth discussions, see IEA and Users TCP (2020) and OECD (2017)):
- Simplification and framing of information is crucial to making communications user-friendly and clear. This is valid for any policy intervention or programme and applies to a broad range of information, including: home energy reports, monthly bills, web portals, appliance efficiency labels and energy audit reports.
- Feedback mechanisms show consumers the evolution of their energy consumption patterns throughout the day and across seasons. Their purpose is to raise awareness about how daily use of appliances, heating and air conditioning affects energy expenses. Feedback can be provided in real time, through in-home displays, mobile applications or web portals fed with data from smart metering systems. It can also be transmitted less frequently, via online or mailed home energy reports.
- Leveraging social norms and comparisons can illustrate to consumers how their consumption compares to that of their peers – comparable households in the same area. This can prompt positive competition effects, motivating users to reduce their excessive energy consumption to bring it in line with the average.
- Goal setting, commitment devices and reward schemes are often jointly exploited in the design of so-called demand response programmes, which invite users to reduce their electricity consumption during periods of high power prices. Utility companies also incorporate them into broader customer loyalty programmes. Such schemes are usually aimed at prompting energy saving efforts in short bursts (during peak usage times or extreme weather events) but can be used to encourage conservation over longer time horizons. Rewards can be monetary (prizes or discounts) or in-kind (free services or product give-aways).
- Changes to product design and to the physical environment which leverage smart default options can simplify efficient appliance use for consumers and facilitate energy-efficient choices. For example: revising regulations that establish the default set-point temperatures of heating and cooling appliances.
Policy interventions and programmes can simultaneously exploit multiple behavioural levers. For example, energy-saving competitions and games can leverage social comparisons among consumers of the same energy utility, and engage participants through real-time feedback as well as set milestones and targets that trigger rewards. The next section summarises the demonstrated impacts that behavioural policy interventions and programmes have on energy savings.
What do we know about the impacts of behavioural interventions?
Assessing the effectiveness of any type of policy intervention or utility-run programme requires credible data on energy consumption as well as rigorous evaluation techniques. Assessments should compare usage before and after the intervention, and data from “treated” groups need to be measured against a control group.
Previous studies have aimed to synthesise the evidence that interventions affect user behaviour. These have either focused on a defined geographical area – North America in the cases of Sussman and Chikumbo (2016), and recent studies by the Boston-based Consortium for Energy Efficiency (2017) and (2019) – or on specific policy levers such as feedback mechanisms, as in the case of Karlin, Zinger, and Ford (2015).
Recent studies carried out in the United States and reviewed by Sussman and Chikumbo (2016), summarised in the chart below, demonstrate that interventions based on different behavioural levers also affect consumer behaviour differently. This can result in varying levels of energy savings. The impact of competitions and games, for example, is generally detected immediately after their implementation. Alternatively, regular feedback programmes like home energy reports tend to deliver continuous and relatively stable savings – provided the programme’s duration is sufficient to allow consumers to adjust their consumption patterns.
Several factors help to explain differing assessments of behavioural impact:
- Evaluation approaches such as whether or not a control group is being compared to the group treated with the intervention itself, and what units of measurement (households vs buildings) are being used.
- Characteristics of the recipients of the interventions, notably the type of home they live in, whether they are homeowners or tenants, and their energy consumption level before the intervention, which is itself driven by numerous socio-economic characteristics.
- Characteristics of the intervention, including its duration and the point in time at which the evaluation is performed.
While being mindful of these factors, we can still draw a number of useful conclusions from these previous analyses:
- Even relatively small levels of energy savings per participant can compound to yield high aggregate reductions in energy consumption in absolute terms. The precise source of the energy savings may vary according to programmes. Home energy reports, for example, have been shown to deliver savings as consumers reduce usage of air conditioners and heaters or switch off idle appliances and lights.
- Opt-out interventions, which involve automatic programme enrolment, can reach a larger number of participants than opt-in programmes that require consumers to explicitly signal their interest in joining. This illustrates how a small change in programme design can make a large difference. Automatic mailings of home energy reports are an example of an opt-out intervention, while a competition or game requires users to opt in. Consumers who choose to participate in a conservation programme are generally already motivated to reduce their energy consumption. As a result, competitions and games tend to achieve higher maximum energy savings – in some cases as much as 14%.
- Behavioural interventions appear to deliver larger cuts to electricity consumption than to natural gas consumption. Home energy reports are estimated to reduce household electricity consumption by as much as 2.2% and natural gas consumption by up to 1.6%. The savings that can be achieved through competitions and games, meanwhile, are around 14% for electricity and 10% for gas. In residential buildings, natural gas is primarily used for ambient heating and hot water, while electricity has a wider range of uses including, air conditioning, lighting and appliances. This could indicate that preferences and habits relative to heating – such as temperature settings and time of use – are more difficult to modify compared to other energy-consuming behaviours in the home.
Visit the original article for illustrations of these insights with case studies of how different behavioural levers have been applied to concrete policies and programmes to prompt energy efficient behaviour change. For more examples and additional details, see UsersTCP and IEA (2020).
Elisabetta Cornago is an Energy Policy Analyst at the IEA