W3LP7 – A study of the economic incentives associated with UK household energy usage
18th October 2015 Sven Hallin

A study of the economic incentives associated with UK household energy usage

Sven Hallin, Loughborough

Aim: To assess how price “formats” influence energy demand in residential property.

1. a) To do a meta-analysis of the available literature with regard to energy demand behaviour and the complex nature of why energy using decisions are made.

1. b) To research the influence of the price mechanism on consumer psychology.

1. c) To review historical energy efficiency schemes and the influence of price formats on their success rates.

1. d) To assess the impending Green Deal, the current providers and the offerings they make.

2. To assess key energy suppliers motivation to use the price mechanism to influence energy demand behaviour (this could be to profit maximise, sales maximise, satisfy regulation, etc.)

3. To research the motivation and ability of suppliers to change consumer energy demand.

4. To assess how supplier endorsements from environmental groups could impact on consumer energy efficiency decisions (and on supplier motivations).

5. To assess how other official bodies, such as local authorities, could enhance or mitigate the effects of price on energy use behaviour and their motivation for so doing.

6. To select 6 case study residential properties in Loughborough and use quantitative methods to characterise the household energy use and qualitative methods to determine energy efficiency behaviour with regard to price.

7. To subdivide the properties by private and rented, so that behavioural responses to energy demand can be assessed in Owner Occupied, Tenant and Landlord sub-groups.

8. To hypothesise a number of price mechanisms that could encourage efficient energy use behaviour.

1. To inform policy on ways the price mechanism could be used to influence energy demand behaviour.

2. To use the research findings to provide greater clarity on what factors determine the threshold beyond which people will seek to improve their household energy efficiency.
Anticipated outcomes:

A comprehensive study should give greater insight into how price “formats” influence energy demand. This greater clarity should be useful in refining existing energy reduction incentive schemes as well as pointing towards possible alternative schemes that may reduce consumer demand for energy

Project Team

Sven Hallin

Tom Weyman-Jones
Kevin Lomas