Thinking too much (or not enough) about electricity
This paper is in part the product of my asking the right question at just the right time in my academic journey. The question so timely for both research and utilities was that of how to roll out demand-side response measures on a grand scale.
The paper in Nature Energy is here: https://go.nature.com/2SwWTiX
This paper is in part the product of my asking the right question at just the right time in my academic journey. I was optimistic enough to think that I could easily access utility customers, and enlisted help from my somewhat skeptical advisor Dan Mazmanian – who happened to have the right connections. The utility answered my query; they could not send out a survey on my behalf, but they could share the results of a survey that they were already in the process of conducting.
The question so timely for both research and utilities was that of how to roll out demand-side response measures on a grand scale. My research interest in demand-side response measures is multifold. Increasing response on the demand-side can make it easier to integrate solar and wind generation into grids without surpassing the technical limits of the old wires and systems. Demand-side response also requires behavioral changes by occupants to either shift use or curtail it entirely. Increasing demand-side response has the potential to ease the path to significantly reducing emissions from electricity generation, but there are many unanswered questions.
For one, despite the behavioral component of demand-side response, very little research before ours had looked at what people think of the pilot programs they participate in. Despite the large share of electricity demand that comes from the residential sector (about a quarter), relatively few studies have examined demand-side response focused on households rather than industries. But I had a more fundamental question about demand-side response – what would make a person willing to switch to a novel type of electricity rate when people dislike thinking about their electricity billing mechanisms at all in the first place? Even more simply, after people participated in pilots did they want to stay on demand-side response-prompting rates? And if they did (rather than preferring to go back to what had previously been familiar), what was different about those who chose to stay versus those who chose to leave?
This simple question had not been asked before, and in considering the answer, my co-author Nicole Sintov and I saw clear links to an extant literature showing that people are overall very poor at understanding not just their electricity use but their electricity bills. Demand-side response measures are often designed resting upon the assumption of economic rationality pushing people to reduce electricity use when it cost them more. Yet there was a very real possibility that people could think they were saving money even when they were not, and might base decisions on this misunderstanding. Our results bore this out. There was very little relation between perceived and actual monetary savings experienced by people in the demand-side response pilot that we examined, and this misperception of savings was the most powerful predictor of intent to remain on the new rate after the pilot ended.
Our findings open many additional research questions regarding demand-side response. We examined people piloting a simple static time of use rate, but will this misperception of savings be exacerbated or mitigated when people participate in more complex dynamic response rates? Will this misperception be better or worse among the general population than it was among our sample of pilot program volunteers, and could this leave people assigned to time of use rates by default – as California is planning to do – facing bill increases yet simply not realizing that the increase has occurred? These questions will become more pressing as demand-side response measures continue to gain momentum in an attempt to modernize the electricity system. There is an exciting space open for future researcher and utility collaboration to better understand how we can keep demand-side response a positive experience for the people paying the utility bills, and I look forward to contributing to and seeing what comes next.