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Future businesses could respond to climate change by developing new technologies that revolutionise our management and control of energy use and activate a change in consumer behaviour

Uber-style technology would allow some decentralisation of energy production to small-scale renewable sources such as solar or wind. The problem with increased renewable power provision is that a peak in the system – when demand is at its highest – can coincide with not enough wind blowing or no sun shining. So you need the back-up of a gas-powered station, which bears a high cost not only in terms of infrastructure and investment but also in terms of carbon emissions.

Households, however, have many opportunities to be flexible about the timing of their energy consumption. For example, in the evening everyone is boiling the kettle as well as putting the dishwasher on; energy monitoring apps or smart appliances can allow people to shift parts of their consumption to other times of the day when electricity is less in demand. Heating and cooling systems could easily be delayed to deal with these demand peaks or supply troughs.

It is not really about the price you are going to pay but what other people are doing – comparing yourself to how much energy your neighbours are saving

The same applies to an increasing number of battery-driven gadgets in the home (laptops, speakers, vacuum cleaners). Aggregating these small and implicit storage devices through smart apps would create a large virtual storage device, and as a consequence a virtual power plant. Altogether, giving people more control over how and when they use power has the potential to yield high carbon savings. However, when do consumers agree to make these changes?

Part of the research we are doing at Imperial College Business School is to understand what incentives people react to. For example, some studies have shown it is not really about the price you are going to pay but what other people are doing – comparing yourself to how much energy your neighbours, for instance, are saving. Providing users with that type of information can be a strong incentive. Educating consumers about the consequences of what they are doing or what they can do to help can also lead to behavioural change. That can be communicated to people via the internet or smartphone apps that remind users of this information.

The problem with increased renewable power provision is that a peak in the system can coincide with not enough wind blowing or no sun shining

Imperial College Business School is running randomised control trials (RCTs) to discover what incentives consumers respond to the most. We recently ran a project at one of our student halls of residence to see how willing people are to reduce their energy use and shift their consumption during the day as well as what types of incentives will encourage them to change their behaviour.

Thanks to a grant funding, we are now running a similar trial in East London involving 500 households. The student project resulted in significant savings of close to 20 per cent; we need to get a better idea of how representative it might be of the wider population. In the longer term, we are applying for grants that will allow us to trial it in several countries and in several residential areas. That will help us answer these behavioural questions and how they are affected by cultural background, by the type of town you live in, and even by climate.

Having the Business School embedded in a technology and innovation university such as Imperial College London is a really great opportunity to be working on the economic, business, social and behavioural aspects of all these technologies: those aspects are as important as the actual technologies themselves. Through RCTs and evaluations, our research team will highlight what the most important elements to take into account are and how energy companies and policymakers can focus on these.

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Mirabelle Muuls

About Mirabelle Muûls

Assistant Professor in Economics
Dr Mirabelle Muûls is a lecturer at the Grantham Institute and an Assistant Professor in Economics. She is Programme Director of the MSc in Climate Change, Management & Finance. She is also a Research Associate in the Centre for Economic Performance at the London School of Economics.