Behavior as a Resource

Traditionally, utilities, policymakers and other experts have approached residential energy efficiency from the perspective of price and technology. In this framework, the primary strategy to reduce household energy use is to replace technology (refrigerators, air conditioners, etc.) by reducing the cost of these investments and providing information on the benefits of these new technologies. Energy efficiency programs have thus aimed to accelerate technology uptake by providing information and incentives around new energy efficiency technologies.

There is another approach, however, that is now considered best practice: behavior-based strategies. Incorporating studies that demonstrate a large inelasticity for residential energy use and the success of programs with a large behavioral component, energy efficiency practitioners now understand that programs to reduce household demand must take into account the best insights of behavioral economics. People are very busy and do not have the time to decide on the most rational course of action, whether it be in shopping, investing or their energy use. So while the intention to save energy may be present, the actions may not be there.

The good news is that it is possible to overcome these psychological barriers and achieve dramatic energy reductions from behavior-based energy efficiency programs. Studies have shown that large energy reductions can be achieved through programs that do not include any individual incentives. Instead, these behavior-based programs inform consumers about their current energy use, ask them to commit to specific reduction targets, give them the tools to meet these targets and send regular feedback on progress. When properly managed, these programs can dramatically reduce residential demand with minimal cost to ratepayers. In fact, the American Council for an Energy Efficient Economy (ACEEE) estimates that around 25% of total energy demand could be eliminated through these behavior strategies.

Of course, energy efficiency practitioners have known for many years that behavior is an important aspect of any program. But with advances in building science, online software development and statistical analysis, we now have the ability to measure the success of these behavior strategies. Instead of simply devoting precious ratepayer dollars to education and marketing campaigns, program administrators can now accurately verify the resulting reductions.

Efficiency 2.0 makes these programs possible through its advanced energy end use algorithms, social media tools and robust measurement and verification.

For further information, please download our whitepaper on Behavior as an Energy Efficiency Resource, linked above. You can see an adapted version at Energy Central.