IEEE Power & Energy Magazine - January/February 2017 - 57

Other Drivers of Behavioral Change
Economists see economic and information policy instruments as means to overcome market failures such as the presence of externalities, split incentives, and transaction costs
associated with investment in and use of smart appliances.
However, from a psychological point of view, some barriers
to flexibility arise because consumers do not always behave
rationally; therefore, additional measures may be required.
For example, DR and DLC may lead to lower energy bills
for consumers, which is a rational reason for them to change
their behavior. However, consumers may feel that they need
to invest considerable effort and give up control for this flexibility, and, as a result, financial compensation may simply
not be sufficient to motivate this behavioral change. Stronger
price signals may overcome this reluctance to some extent
but not fully, as consumers tend to feel uncertain about
whether they will benefit and for how long.
Consumers respond not only to economic benefits; there
are also other motivations underlying their behavior. For
example, in addition to their own benefits, consumers may
also consider the collective consequences, such as the importance of having a secure, sustainable, and affordable energy
system for all. If consumers understand how their behavior
can contribute to this, they are more likely to engage, despite
little financial gain, because they want to contribute to society.
Also, it is important not to overestimate consumers'
interest level in the topic of "energy." For most, the services
provided by energy including watching television, doing laundry, or being warm are more important than "energy" and
"energy demand" in themselves. Nudging is another strategy
to change consumers' behavior toward becoming more flexible. This strategy relies on using consumers' automatic gut
feeling, rather than on their consciously considered behavior.
Nudging is based on the idea that the context is changed so
that, when people follow their gut feeling, they automatically
choose (and thus are nudged toward) the desired option. This
january/february 2017

100
90
80
70
60
50
40
30
20
10
0

% People Saying "yes" to Smart
Meter with Automated Control

more trustworthy when it comes from sources that are seen
as objective in the protection of consumers' interests (e.g.,
environmental organizations, scientists, or consumer organizations) than when it comes from sources that are not
typically seen to have consumers' interest as a main priority (e.g., industry or government).
It is well known that, when the provision of information
enhances transparency on energy use and utility billing, consumers are more likely to trust the information and act upon
it. However, consumers' trust is not guaranteed just because
information is provided, and good intentions may backfire.
Fear of infringement on their freedom or privacy can lead to
strong objections by consumers to engaging in any activity
that may lead to a more flexible energy system. It is important to acknowledge and address such responses, as they
can seriously undermine the effect of any program aimed at
changing consumers' energy behavior toward enhancing a
more flexible energy system.

Opt-In

Denmark

Opt-Out

Norway

Switzerland

Note: In the original study, a third group was included.
See Broman-Toft et al. for more information.

figure 4. The effect of different default options on consumers' adoption of smart meters with remote control.
(Source: M. Broman Toft, G. Schuitema, and J.Th√łgersen,
"The importance of framing for consumer acceptance of
the Smart Grid: A comparative study of Denmark, Norway,
and Switzerland," Energy Research & Social Science, no. 3,
2014, pp. 113-123.)

has been accomplished, for example, by suggesting a different default option to consumers when choosing between gray
and green energy or about whether or not to have a smart
meter with automated control (Figure 4).
In the second example, after receiving general information
about the smart meter, one group (opt-in) of participants could
check a box indicating "Yes, I would like to have a smart meter
with remote control installed in my house"; it was made clear
that if they did not check the box, they would automatically not
get the smart meter. The other group (opt-out) could only check
a box "No, I would not like to have a smart meter with remote
control installed in my house," and it was implied that if they
did not check the box, they would get the smart meter. This
study was carried out in three different European countries, and
the results show a similar pattern: in all cases, consumers in
the opt-out group were more likely to accept smart meters with
automated control compared to those presented with the opt-in
conditions. Such studies show that people tend to go along with
the choice that is presented as the default option. This implies
that when the "desired" option is presented as the standard
choice (e.g., green energy, smart meters with automated control), consumer uptake often increases.

Technology Adoption
and Investment Behavior
Consumers can facilitate a flexible energy system by adopting new technologies and investing in them. Such investments are usually fairly large, which is one of the barriers
to consumer investment. A range of economic instruments
exists that can support consumer investment in smart and
efficient technology that supports flexibility.
ieee power & energy magazine

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Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - January/February 2017

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