by Kimberly S. Wolske, Annika Todd-Blick & Emma Tome
The policy problem
Low-income households spend a disproportionate amount of their income on energy bills. To address this burden and promote an equitable clean energy transition, many countries have enacted policies that provide efficient and renewable energy technologies at low or no cost to lower-income households. The US Inflation Reduction Act is one recent example. But offering such technologies free of charge may not be enough to attract eligible households. Like other social benefits programmes, many subsidized energy programmes go undersubscribed, owing to distrust of programme providers, high hassle costs for programme enrolment, and lack of information. Low participation rates translate to inefficient use of programme funds, as programme administrators must allocate additional resources for outreach, especially to capture vulnerable, hard-to-reach populations. Emerging research suggests there is promise in tapping existing programme beneficiaries to find new participants, but evidence on how to best do this is scant.
We identify cost-effective, scalable strategies to improve the efficacy of a peer referral programme for fully-subsidized low-income solar in California. The baseline programme (‘control’) offered existing programme participants a US$200 reward for every referral that resulted in a solar installation (Fig. 1). Adding a token gift upfront with a reminder about the programme (to evoke a sense of ‘reciprocity’) led to 1.7 times the response rate, 2 times the number of referrals and 2.6 times as many solar contracts. A third ‘reciprocity and simplification’ group in which the gift was combined with a mailable referral slip (instead of just phone or web referrals) led to nearly 5 times the response rate, 7.5 times as many referrals, and 5.2 times as many solar contracts — making it more cost-effective than the baseline programme. It was also more effective at eliciting referrals from participants who had not previously referred. The results highlight strategies that could be adapted to other energy assistance programmes for electrification measures, heating and insulation upgrades, and electric vehicles.
The data are from a field experiment with all 7,680 homeowners who received fully subsidized solar in California from 2004 to June 2018. Households were sent one of three mailers reminding them that they could receive US$200 for each nomination which resulted in a solar installation. The ‘control’ group received the standard postcard, with a website and toll-free number for making referrals. The ‘reciprocity’ group provided the same information in a letter along with a US$1 gift to thank clients for being part of the solar community. The ‘reciprocity + simplification’ group further provided a referral slip and stamped return envelope. We tested for differences in response rates to the mailers, the number of nominations provided, whether nominations lived in subsidy-eligible areas, and the number of resulting solar contracts. As the referral reward was in all conditions, further research is needed to know how important the reward itself was.