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Do small pecuniary incentives motivate residential peak energy reductions? Experimental evidence

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  • Andrew Royal
  • Galib Rustamov

Abstract

This article evaluates demand-side interventions aimed at reducing residential consumption during the peak energy periods. The interventions were applied to a sample of high-income households and included a set of text message reminders advising participants to reduce electricity use during peak hours. One group of participants received accompanying intra-day increases in peak-hour kWh rates, while another group of participants did not receive any price incentives. We find that intra-day price increases, though small in absolute magnitude, produced significant reductions in peak energy use. Reductions in use, as compared to a control group, were significantly higher among the pricing group compared to the group only receiving text messages, suggesting that pricing played a central role in influencing behaviour. Our results contribute to ongoing policy discussion about the effect of dynamic pricing on consumer energy demand.

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  • Andrew Royal & Galib Rustamov, 2018. "Do small pecuniary incentives motivate residential peak energy reductions? Experimental evidence," Applied Economics, Taylor & Francis Journals, vol. 50(57), pages 6193-6202, December.
    • Handle: RePEc:taf:applec:v:50:y:2018:i:57:p:6193-6202
    DOI: 10.1080/00036846.2018.1489508
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    Cited by:

    1. McAndrew, Ryan & Mulcahy, Rory & Gordon, Ross & Russell-Bennett, Rebekah, 2021. "Household energy efficiency interventions: A systematic literature review," Energy Policy, Elsevier, vol. 150(C).
    2. Leandra Scharnhorst & Thorben Sandmeier & Armin Ardone & Wolf Fichtner, 2021. "The Impact of Economic and Non-Economic Incentives to Induce Residential Demand Response—Findings from a Living Lab Experiment," Energies, MDPI, vol. 14(8), pages 1-24, April.

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