By Robert Walton
For utilities looking to influence customer energy use — shifting demand to off-peak hours, for instance — there is a growing body of research that concludes the simplest solution is price. That may seem obvious, but the findings contrast with programs that rely on social cues and call for conservation in an attempt to manage customer demand through “behavioral demand response.”
“Experimental Evidence on the Effect of Information and Pricing on Residential Electricity Consumption,” a new study authored by Dartmouth researcher Praveen Kopalle, examines a field experiment in Texas conducted on the non-profit Pecan Street neighborhood test bed. The research concludes critical peak pricing intervention reduced electricity consumption by 14%.
“In contrast, we find minimal response to active information provision and conservation appeals,” the authors wrote.
Those findings bear some similarity to research published last year by the University of Chicago, which concluded price-based incentives are the most effective and consistent way to tweak customers’ energy use. While that research found some efficacy in non-price incentives, the Dartmouth conclusions are more stark.
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