If you’ve ever noticed a New Year’s resolution lapsing, you’re not alone. Habit change can be difficult because of certain quirks of human psychology. Utility energy efficiency programs are combining lessons from marketing, social sciences, and behavioral economics to deal with some of the same quirks and even using them to improve decision-making.
Last week, we talked about consumer engagement and behavioral energy efficiency, from the vantage point of technology and users. This week, we’re going to talk more about programming.
Utilities need to promote energy efficiency. The latest American Council for an Energy-Efficient Economy (ACEEE) State Energy Efficiency Scorecard1 for 2015 reported that in 2014 (the most recent year available) total energy efficiency spending was more than $7.3 billion, and even the worst-ranked state2 had some utility energy efficiency programs. This figure should grow, “One analysis of customer-funded energy efficiency program budgets estimated that funding for electric and natural gas programs will rise to $15.6 billion by 2025”3 “Twenty-five states continue to enforce and adequately fund energy savings targets to drive investments in utility-sector energy efficiency programs.”
More energy-saving devices give utilities more opportunities to interact with consumers through behavior – programmable thermostats and other wifi enabled devices. Yet it’s clear that more technology options alone won’t help if users don’t learn new habits required to get the most from the technology.4 In fact, some research shows that people are surprisingly resistant to even acquiring the new technology when it would save them money.
There are several biases in the way people evaluate decisions like these. A 2015 Institute for Market Transformation (IMT) article gives a few examples of these biases, for one, “the endowment effect… [which says that] people attach extra value to the goods that they own as opposed to goods that they do not yet own….” In short, this means that consumers will not part with a $10 item they purchased for less than $20.4
Research on behavior-based energy efficiency is just starting
Behavior-based energy efficiency (BBEE) programs are still in their early stages. Despite significant research on behavioral science, its application to energy is relatively new. In 2015, Naomi Cole, Program Manager at CLEARresult, which is North America’s largest energy efficiency consulting firm wrote, “We are testing this model within our client’s energy efficiency programs to better understand what best motivates people to act.”4
Early research supports inclusion of behavior based utility energy efficiency strategies. “Researchers in the energy efficiency and energy policy fields have started to take notice of how these concepts might be used to better understand consumer behavior when it comes to energy use.”5
A few years back (2013) the American Council for an Energy-Efficient Economy (ACEEE), published a, “field guide,” to utility-run behavioral programs.6 In creating a, “taxonomy of behavior programs,” after analyzing 238 behavior-based programs from 104 energy providers. The resulting taxonomy was comprised of 20 major behavioral program categories,” in three families:
- Cognition programs focus on delivering information to consumers. They include general and targeted communication efforts, social media, classroom education, and training.
- Calculus programs rely on consumers making economically rational decisions. They include feedback, games, incentives, home energy audits, and installation.
- Social interaction programs rely on interaction among people for their effectiveness. They involve social marketing, person-to person efforts, eco-teams, peer champions, online forums, and gifts.
Stack approaches for best results
Multimodal programs were ones that combined strategies from more than one of the 20 categories. Programs that combined strategies from at least one of each of the three families, they called, “stacked programs.” So stacked programs combined more diverse strategies than multimodal ones.7
These, “stacked programs [were] not simply a fortuitous assemblage of elements; they involve[d] a deliberate design decision to incorporate social and behavioral science insights into energy efficiency programming.”
The field guide study recommended, “holistic, stacked programs with a conscious eye toward engaging multiple facets of decision making and behavior, most importantly, emotions, reason, and social interaction.” This, they hypothesized, would, “activate multiple complementary drivers of human behavior and thereby yield deeper, more consistent results.” “Social science theory on material culture,” and, “marketing studies of media and consumption,”8 backed up this recommendation.
Criteria: efficiency gains and market changes
Despite limited9 data, several interesting findings emerged: First, utility-run behavior programs appeared be cost effective.10 Second, larger utilities reaped larger efficiency gains — meaning that scaling up helps cost effectiveness. Third, utilities could improve their results by coordinating their programs with other utilities.11
The report also points out that another important measure of success is market effects, “Behavior programs contribute to long-term structural shifts in how people use energy and make decisions about energy consumption, shifts that are important beyond the simple kilowatts saved.”12
As more utilities get involved, as budgets increase, and as additional research helps build better programs, the future of behavior-based energy efficiency programs is bright… especially in the rooms people are using.
1. ACEEE, 2015, “The State Energy Efficiency Scorecard” [PDF summary for the United States at page 1].
2. ACEEE, 2015, “North Dakota” [PDF summary for the state at page 1].
3. ACEEE, 2015, “The State Energy Efficiency Scorecard,” [link to post from which you can download the full report with a login.] Full report at page 23.
4. Naomi Cole, April 15, 2015, “Behavior Based Energy Efficiency: The Power of People,” CLEAResult.
5. Amy Jewel, March 26, 2015, “Can Behavioral Economics Help Energy Efficiency?” Institute for Market Transformation.
6. Susan Mazur-Strommen, Kate Farley, December 19, 2013, “Field Guide to Utility-Run Behavior Programs,” ACEEE Blog.
Photo credit: “Stack of Coins” by Austin Kirk on Flickr