Energy conservation pushes utilities to get inside consumers’ heads

Thermostat

Feb. 25, 2015

The Environmental Protection Agency is poised this year to let states and utilities motivate their customers to cut back on electricity use to reduce CO2 emissions. A group of social scientists, however, note it’ll take more than random rebates or gadgets to pull off real change.

Research shows that if done right, the energy savings and financial rewards for consumers could be substantial. But for the approach to work, energy utilities will have to be more in touch with their behaviorist side.

The EPA is aiming fairly low with its “Clean Power Plan” – looking for states to save 1.5 percent annually between 2020 and 2029 by reducing consumer demands. But history has shown that persuading consumers to cut back on energy isn’t as simple as promising them they’ll save money, or even save the planet. A Michigan State University environmental sociologist points out the challenges – and possibilities – in this week’s Nature Climate Change.

Thomas Dietz , a member of the MSU Center for Systems Integration and Sustainability and professor of sociology, environmental science and policy, says that consumers do care about saving money and the environment. But those impulses can be tempered by confusion over how much saving is enough to be inspirational, or how much hassle energy savings programs inflict. And a deeper dive into consumer behavior has shown that one consumer’s motivation, notably slowing climate change, can turn another consumer off.

“Money matters, but it’s not the only thing that matters to most people,” said Dietz “Intentions are good, but life is complicated and busy. If it’s hard to do, hard even to figure out what to do, it won’t happen.”

Which leads to a bottom line: Utilities are going to have learn to be more savvy about their customers wants, needs and desires. Kind of like the auto industry.

The paper “U.S. climate policy needs behavioral science” notes that programs that offer incentives for technology, such as solar power and more efficient appliances, as well as programs that offer rewards for changing behavior, like turning down the thermostat, aren’t new. But they all have rather checkered pasts when it comes to success.

The success or failure of programs translating into less energy used often comes down to understanding consumers, and helping consumers understand their choices, Dietz said. It sounds fairly straightforward, but the paper’s authors note suddenly being thrown into the customer-oriented business can be a pretty big rub.

The paper delves into the challenges in adequately quantifying the programs, and verifying that they work. It gets especially thorny when some savings programs fed consumers into other programs, making it hard to evaluate which program worked, or they fall into what behaviorists call the “rebound effect.” A person may buy an electric hybrid car, inspired by the idea of saving gas. But that excitement over the efficiency has been known to cause a rebound, making the consumer free to drive more miles, and thus use more gas.

“How all these effects — doing more, being a model for friends, maybe being a bit sloppy in your energy use with the more efficient equipment — play out in practice and will vary from person to person and place to place,” Dietz said.  “That’s why we need to study programs to encourage efficiency to figure out how to design programs that are really helpful to people.”

Dietz says that while customer-based industries – say, car dealers – are highly attuned to consumer wants, needs and buying habits, energy utilities have a history of thinking large scale and long term, and have a different kind of engineering relationship with equipment.

“Utilities aren’t used to understanding and engaging with their customers,” Dietz said. “We know good programs generate a lot of energy savings. We know that poorly designed programs don’t work well at all. That meant the utilities have to take on a new challenge of understanding how their customers behave, and what programs will work for them.”

Besides Dietz, the paper was written by Amanda Carrico at the University of Colorado at Boulder; Michael Vandenbergh at Vanderbilt University; and Paul Stern at the U.S. National Research Council Board on Environmental Change and Society.

Contact:

Sue Nichols, (517) 432-0206, nichols@msu.edu

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