Uptake and usage of cost-reflective electricity pricing: Insights from psychology and behavioural economics
By E. Hobman, E. Frederiks, K. Stenner, S. Meikle. 2016
125 citations recorded by the source corpus.
The Australian electricity industry – like many other countries globally – is currently facing the complex challenge of reforming electricity tariffs. Momentum is growing for transitioning residential consumers toward more ‘cost-reflective’ pricing that better reflects the true costs of generation and supply, and sends a ‘price signal’ that presumably incentivises reduced consumption during peak periods. Under such tariffs, customers pay more for electricity used during times of peak demand – unlike traditional ‘flat-rate’ tariffs where the price remains stable regardless of time or demand. Pilot trials indicate that cost-reflective tariffs might succeed in reducing peak demand, but often only for a small minority of customers, such that population-wide demand response is minimal or insignificant. In this paper, we apply insights from psychology and behavioural economics to identify how cost-reflective pricing can be designed, depicted and delivered to enhance customer uptake and optimal usage –thereby facilitating ‘appropriate’ demand response – for a larger cross-section of the population. By carefully considering the likely impact of relevant cognitive biases and psychological factors –which routinely shape human decision making and behaviour – we are able to propose practical strategies that industry can adopt to maximise the prospect of cost-reflective pricing achieving significant population-level peak demand reductions, while providing shared benefits for customers, retailers, networks and regulators alike.
Subfields: Building and Construction, Electrical and Electronic Engineering, Renewable Energy, Sustainability and the Environment
View Paper: https://www.semanticscholar.org/paper/80dae7102319b89c5847ab51c5ff0107143fc01d
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Building and Construction
In Electrical and Electronic Engineering
In Renewable Energy, Sustainability and the Environment
Citations in the corpus
- Internal and external barriers to energy efficiency: which role for policy interventions? (2019, background): “behavioral explanations exist, but the most powerful and pervasive ones to influence energy usage and investment are (Laibson and List 2015; Hobman et al. 2016) (1) reference-dependence and non-linear probability”
- Consumer demand for time of use electricity tariffs: A systematized review of the empirical evidence (2018, result): “To enable robust causal inferences, this research must involve the random assignment of participants to variations of the same tariff to test which variation results in higher switching rates as argued by other authors too [16].”