Role of energy use feedback and dynamic pricing positive, European study demonstrates


Amsterdam, The Netherlands and Brussels, Belgium — (METERING.COM) — October 12, 2011 – Consumers react positively to feedback on their energy usage and dynamic pricing mechanisms, a major new study from the European Smart Metering Industry Group (ESMIG) has confirmed.

The Empower Demand study, which was undertaken by the VaasaETT global energy think tank with coordination by Jessica Stromback, is based on approximately 100 smart meter enabled pilots and rollouts involving over 450,000 residential customers across the world.

The study found that in comparison with the other feedback channels, in-home displays, with almost real-time and visible delivery of the feedback, resulted in the highest energy savings, on average an 8.7 percent reduction. The remaining channels for feedback, webpage, and informative bills produced lower but still significant reductions of 5-6 percent. Time-of-use (TOU) peak reductions are the lowest, but they occur daily, while critical peak pricing and rebate (CPP, CPR) produce the highest reductions but only for critical peak periods.

According to the study the findings demonstrate that technology provides an important and enabling function in creating a successful demand side program. However, it is one of five factors which decide success, the others being socioeconomic factors, participant consumption patterns, program content/structure, and household load sources. In this, socioeconomic factors and consumption patterns can overcome supportive technology and program type. For example, a good informative billing pilot can lead to higher savings than an in-home display pilot depending on surrounding circumstances.

The study states that program success is directly dependent on consumer involvement, with the findings indicating that "more is more" at every stage of the piloting and rollout process. For example, within marketing, programs using consumer segmentation to create directed marketing messages for a particular consumer group increase consumer uptake and results. In program structure, feedback and pricing together tend to achieve better long term overall results than either program type alone. Education improves dynamic pricing and informative billing programs. Multiple types of information on a display or a bill (current consumption, price, historical consumption, etc.) tend to achieve higher results than a display or a bill with only one message. Program layering is little explored but there are signs that hidden potential lies in starting with a relatively simple program and gradually creating offerings of increasing complexity and value.

The study concludes that it is essential to move forward in pilot development through innovative questions, taking into consideration the results of past pilots and comparative studies such as this one. Pilot organizers should focus their research on better understanding who is in the market and what can be done to maximize their participation within that market’s reality. Long term program success will require a comprehensive combination of marketing, technological support, directed communication and a constructive regulatory framework.

According to ESMIG, which funded the study, the benefits demonstrated could, if delivered across Europe, contribute to the EU goal of a 20 percent reduction in energy use by 2020 if similar installations were set up across Europe.