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Can pecuniary and environmental incentives via SMS messaging make households adjust their intra-day electricity demand to a fluctuating production?

Author

Listed:
  • Niels Framroze Møller

    (DTU Management Engineering, Technical University of Denmark)

  • Laura Mørch Andersen

    (Department of Food and Resource Economics, University of Copenhagen)

  • Lars Gårn Hansen

    (Department of Food and Resource Economics, University of Copenhagen)

  • Carsten Lynge Jensen

    (Department of Food and Resource Economics, University of Copenhagen)

Abstract

The increasing deployment of renewables introduces substantial variability into the production of electricity, requiring demand to be more movable across time. We analyze data from a large Danish fi eld experiment (2015-2016) to investigate whether households can be prompted, via SMS messages, to move electricity consumption, and if so, whether these are motivated by pecuniary or environmental motives. To take heterogeneity fully into account we fi rst use general-to-speci c-based automatic model selection which allows for a different time-series regression for each of the 1488 households studied. From this we obtain a cross-section of estimated SMS effects which we then regress on the motive type. Since households can opt out there is a risk of self-selection. We therefore control for the size, income and average consumption of the household, and the age, educational- and labor market status of the SMS recipient. The results suggest that SMS messages can to some extent motivate households to move consumption. A stronger fi nancial motive seems more effective, whereas a purely environmental motive actually reduces the displaced amount. However, mixing financial and environmental motives seems the most effective. Finally, women and elderly people are more inclined to move consumption.

Suggested Citation

  • Niels Framroze Møller & Laura Mørch Andersen & Lars Gårn Hansen & Carsten Lynge Jensen, 2018. "Can pecuniary and environmental incentives via SMS messaging make households adjust their intra-day electricity demand to a fluctuating production?," IFRO Working Paper 2018/06, University of Copenhagen, Department of Food and Resource Economics.
    • Handle: RePEc:foi:wpaper:2018_06
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    More about this item

    Keywords

    Household-level electricity demand; Automatic general-to-specific model selection; SMS messaging; field experimental data;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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