Financial incentives have 'no effect' on energy use

More people were likely to reduce their home heating than take shorter showers, SEAI study found.

Offering consumers financial incentives to cut down on their energy use “can backfire” and recent research has suggested framing campaigns around potential financial savings “had no effect” on people’s intentions to save energy.

Furthermore, a trial campaign on consumers’ energy saving behaviours showed they were “driven much more strongly by concern about climate change rather than concern about the cost of living”.

That’s according to the Sustainable Energy Authority of Ireland, which has developed a new policy guide on consumer energy saving behaviour through its in-house behavioural economics unit.

Within it are contained nuggets of research suggesting what resonates most with households and influences them to reduce their energy use.

The SEAI said the country’s need to move to clean, affordable and secure sources of energy is “greater than ever” as we enter 2023 “amidst an energy crisis, a cost-of-living crisis and a worsening climate crisis”.

Late last year, ESB Networks introduced a new scheme called the Beat the Peak initiative, which has offered incentives to consumers cut down their electricity usage at peak times.

Domestic customers who take part are sent direct messages suggesting ways to cut their energy usage. During “peak demand events”, customers will receive notifications advising them of measures to take and receive rewards for taking action.

The SEAI has said it has developed its new guide “aimed at anyone communicating with citizens to encourage energy consumption”.

It contains 14 recommendations, including case studies from this and other jurisdictions to back up its assertions.

One of them is to choose energy saving behaviours that are likely to have the highest impact and are most likely to resonate with people.

“For instance, an SEAI study from April 2022 that recorded people’s intentions to carry out various energy saving behaviours found that more people were likely to reduce their home heating than take shorter showers,” it said.

Messages that tell people they will lose money rather than gain money tend to be more effective, according to the SEAI.

The SEAI said while energy conservation is often framed around potential financial savings, evidence supporting the effectiveness of such incentives was “mixed”.

“Highlighting financial motivations for energy saving can backfire if people believe the potential savings will be low, “crowding out” intrinsic environmental motivations,” it said.

Other recommendations involve highlighting “positive social norms” and “appealing to people’s sense of social identity”.

The SEAI said: “Social norm messaging is more effective when it refers to the behaviour of members of a social group or community that the message recipient feels a part of.” 

It pointed to an initiative to reduce water consumption in Norfolk in the UK, where placing an illustration of a windmill considered famous in that area led to double the sign-up for the programme than those who received a letter without the illustration.

It added, however, there are some limitations to its research and the cost-of-living dimension or the current energy crisis may require a different communication approach to help vulnerable households cope.