Defeat the Peak: Behavioral insights for electricity demand response program design

• Published in: Energy research & social science Vol. 61; p. 101352
• Main Authors: Pratt, Bonnie Wylie, Erickson, Jon D.
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.03.2020
• Subjects: Behavioral economics; Demand response; Demand-side management; Energy system transition; Energy utility industry; Pro-social incentives; Pro-social incentives; Energy system transition; Demand response; Energy utility industry; Behavioral economics; Demand-side management
• ISSN: 2214-6296; 2214-6326
• DOI: 10.1016/j.erss.2019.101352

•A demand response program with a non-financial incentive was analyzed using a difference-in-differences model.•Altruism was investigated from an inter-disciplinary perspective to understand why residential users changed their behavior to help a local charity.•The electric distribution utility spent $6000 in direct costs on donations to local charities and saved over $190,000 in energy capacity costs. Electric utilities and regulators primarily rely on rate design strategies and economic incentives to achieve customer load malleability at the residential level. However, demand-side management strategies are broadening to incorporate new motivational cues based on pro-social impulses to reduce negative environmental impact and contribute meaningfully to local communities. This evolving relationship between residential customers and utilities is explored to better understand the potential for load malleability achieved through non-economic incentive structures and rate design. Following a review of interdisciplinary perspectives on pro-social behavior and utility demand-side management strategies, we analyze the impact of a pro-social demand response program on the energy use of over 16,000 households served by a municipally owned electric utility in Burlington, Vermont, USA. Results indicate that the program achieved a 13.5% decrease in energy use during the peak annual event in August 2018 with a return on investment of 11 to 1 for the distribution utility. This study builds on the work of other researchers studying individual energy behavior change and supports the argument that pro-social incentives can improve the effectiveness of demand response programs.