Energy Usage Reduction and Demand Response:

A Social-Psychological Approach

Dr. Xiaojing Xu Dr. Chien-fei Chen

!!

June 18th, 2014

Outline

❖ Our research topics ◇ Why reduce energy use? ◇ Why demand response? !

❖ Major contributions of social psychology approach ❖ Our studies ❖ Brief introduction of social psychology research

methods

Electricity Usage Reduction

• Absolute reduction ◖ Curtailment behaviors (mostly habits) ◖ Energy efficient behaviors (mostly purchases)

• Demand response (time shifting) ◖ Electricity usage shifting across time ◖ Purchase of appliances with automation

features. ◖ Registering devices with utility companies

Contribution 1– Social Norm Approach

• Social norms (Cialdini, 1994): injunctive norms (what others approve, “what should be done”) vs. descriptive (what others actually do)

Below “Please reuse your towels” !Control: HELP SAVE THE ENVIRONMENT. You can show your respect for nature and help save the environment by reusing your towels during your stay

Social Norm: JOIN YOUR FELLOW GUESTS IN HELPING TO SAVE THE ENVIRONMENT. Almost 75% of guests who are asked to participate in our new resource savings program do help by using their towels more than once. You can join your fellow guests in this program to help save the environment by reusing your towels during your stay.

Recycling Towels in Hotels:Evidence for the Power of Descriptive Norms

Goldstein, Cialdini, & Griskevicius (2008, J of Consumer Research)

Social Norms Approach: Opower

Contribution 2– Message Framing

• Program A: If Program A is adopted, 200 people will be saved.

• Program B: If Program B is adopted, there is 1/3 probability that 600 people will be saved, and 2/3 probability that no people will be saved. !

• Program C: If Program C is adopted 400 people will die.

• Program D: If Program D is adopted there is 1/3 probability that nobody will die, and 2/3 probability that 600 people will die.

Contribution 2– Message Framing

• Framing ◖ Perspective theory: people respond to losses

more than they do to gains “If you do not insulate your windows, you are losing $50 dollars every month.” “If you insulate your windows, you will be gaining $50 dollars every month.”

Message Framing– Our Study

• Goal: ◖ Environmental benefits vs. financial benefits ◖ Short-term benefits vs. long-term benefits ◖ Outcome variables: 1. attitude towards saving

electricity & perceived efficacy • Method: 292 American residents through

Amazon Mturk. ◖ Dispositional environmental attitude was

measured ◖ With a 2×2 experimental design, participants were

randomly assigned to 4 conditions.

10

Economic, Long-Term

11

Message Design

• Results: ◖ Environmental benefits produced more positive

attitudes towards electricity saving than financial benefits;

◖ Long-term benefits induced higher perceived efficacy for people with higher environmental concern, while short-term benefits induced higher perceived efficacy for people with lower environmental concern.

• Implications: ◖ Pay attention to individual differences and group/

organizational cultures when designing messages for building energy saving programs.

12

Message Framing - Other

• Anthropomorphism (e.g., “mother earth”)

Smart Grid and Smart Meter

• Smart Meter is an important part of Smart Grid

• In the US, approximately 22 million smart meters had been deployed in 2011;

• By the end of this decade, smart meters may by deployed to almost all US households.

https://www.psoklahoma.com/save/SmartMeters/HowSmartMetersWork.aspx

Advanced Metering Infrastructure

- SAY NO to health effects from radiation - SAY NO to increased utility costs - SAY NO to required appliance change outs - SAY NO to invasion of privacy - SAY NO to remote shut downs - SAY NO to uninsurable consequences

The Questions Are…

• What are the drivers and barriers? • How to better educate people and promote

the use of smart meters?

Usefulness privacy

Useful2

Useful1

Useful8

Useful3

Useful4

Useful5

Useful6

Cost/Fee

Money Money2

Money1

Money3

Money4

Money6

Priv4R Priv6RPriv5R Priv7R

EnvironEnviron2

Environ1

Price2 Price3

Trust

Trust1 Trust2 Trust3 Trust4

Support

Environ4

Environ3

.81

.90

.90

.81

.91.86

.74

.62

.64

.79

.78

.75

.91

.96

.84

.76

.74 .87 .94 .95

.96

.93 .85

.84 .84 .94

-.14, p < .001.51, p < .001

.008, p = .820

.114, p = .002

.022, p = .483

-.096, p = .005

.47

Next, the questions are…

• Does installing a Smart Meter direct lead to energy saving and active demand response? !

• If feedback is the key, what feedback program works best? (frequency, channel, absolute vs. comparative, unit?) !

• Long-term effect?

The Effectiveness of Feedback Programs

20

Random Selection (Sample)

Experimental Group 1

Experimental Group 3

Experimental Group 2

Control Group

Baseline Measurement

Manipulation 1 Manipulation 3Manipulation 2 No Manipulation

Post-Experiment Measurement

Outcome 1 Outcome 3Outcome 2 Outcome 4

DV

IV

2nd Measurement

Population

Demand Response

The questions are…

• How to get people better respond to dynamic pricing and other financial incentives?

• How to encourage people to accept automation? • Any social incentives (e.g., identification,

competition) that can be more effective?

Demand Response & Customer Segmentation

• Goal: 1) understanding the reward-response connection; 2) Identifying the customer segment that responds to demand response programs the best/worst, and helping with developing targeted demand response (DR) programs. !

• Method: 711 U.S. residents across 48 states participated in an online survey !▪ People chose the minimum amount of monetary rewards that they would

need in exchange for adopting heating & cooling (HC)-related DR behaviors:

▪ 1) Adjusting HC thermal setting by 2-3oF when at home ▪ 2) Adjusting HC thermal setting by 5oF or more (or shutting off HC)

before leaving home ▪ 3) Allowing utility companies to adjust HC thermal setting by 2-3oF

when needed ▪ 4) Shutting down HC for 10 (& 30) minutes in response to emergency

messages People chose ▪ Social-psychological variables & demographics were measured Measuring social-psychological variables

23

Demand Response & Customer Segmentation

24

0.0%

20.0%

40.0%

60.0%

80.0%

Adjust 2-3°F_at home Emergency shut down 10mins

0.511

0.719

0.3630.3430.330.291

0.544

0.1970.2250.156 0.146

0.303

0.0930.16

0.086

no rewardsno rewards or a reward <5% monthly billno reward or a reward <10% monthly bill

rat

es

in

res

po nd ent

s

Figure: adoption rates with no rewards, a reward <5% monthly bill, or a reward <10% monthly bill

Demand Response & Customer Segmentation

• A two-step cluster analysis and a K-mean cluster analysis were conducted with respondents’ answers as clustering variables

• A 3-cluster solution turned out to yield the most distinguishable and interpretable clusters. !!!!!!!!!

Figure: adoption rates in different clusters with no rewards or a reward <5% monthly bill.

most cooperative

0.0%

20.0%

40.0%

60.0%

80.0%

Adjust HC for 2-3°F_at home Emergency shut down 10mins

0.030

0.030.080.07

0.229

0.549

0.030.0670.054

0.46

0.756

0.4360.45

0.292

Cluster 1 (n=291)Cluster 2 (n=297)Cluster 3 (n=116)

n rate

s in

cl

uste

rs

25

Demand Response & Customer Segmentation

• Features of the cooperative cluster !!!!!!!!!!!

• Implications for industry practice ◖ Focus on particular groups ◖ Appropriately address customers’ concern for comfort ◖ Build relationship with customers, enhance trust

26

The Cooperative Cluster

Lower Comfort Need in Summer

Higher Concern

for Environme

ntal Impacts

Higher Trust in Utility

Company

Younger More Renters

More Smaller Homes

Summary- What social psychology offers

• Theories ◖ Decision-making models ▪ E.g., perspective theory (gain-loss framing)

◖ Behavioral models ▪ E.g., Technology acceptance model; Theory of

planned behavior; Value-Belief-Norm model… !

• Empirical evidence ◖ Surveys ◖ Experiments

• Look at the question under the question

Summary• Why is saving energy important • Why is the behavioral approach important • Different types of electricity conservation ◖ Absolute reduction vs. Time shifting

• Social psychology studies ◖ Social Norm Approach- Hotel towel & Opower

• Social psychology research methods ◖ Survey & Experiments

• What social psychology can offer • Challenges: smart meter deployment & demand

response

Thank you! !

Questions?

29