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Smart choices? An experimental study of smart meters and time-of-use tariffs in Ireland

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  • Belton, Cameron
  • Lunn, Pete
Abstract
The introduction of smart technology and dynamic tariffs (such as time-of-use tariffs) provides multiple potential benefits for electricity markets. However, time-of-use tariffs generate additional complexity for consumer tariff choices in electricity markets. How well consumers can choose between tariffs, and whether certain tools improve these choices, are therefore important questions for energy regulators and policy makers. This paper presents an exploratory study that used experimental behavioural science to investigate consumer choice in electricity markets with time-of-use tariffs. A representative sample of consumers (n = 145) were given information about smart meters and time-of-use tariffs. A sequence of experimental tasks measured attitudes towards smart meters, comprehension of tariffs and quality of decisions between different types of electricity tariffs, where quality was judged against participants’ own perceptions of their electricity usage. The findings suggest that consumers struggle to match tariffs to usage accurately, with a general aversion to time-of-use tariffs that may lead to sub-optimal choices between tariff types. When participants chose between different priced time-of-use tariffs via an experimental price comparison site, decisions were significantly improved by a tool that personalised estimated costs. Policy implications include the importance of pre-testing interventions designed to improve consumer decisions.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Belton, Cameron & Lunn, Pete, 2019. "Smart choices? An experimental study of smart meters and time-of-use tariffs in Ireland," Papers WP633, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:wp633
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    Cited by:

    1. Brown, Alastair & Hampton, Harrison & Foley, Aoife & Furszyfer Del Rio, Dylan & Lowans, Christopher & Caulfield, Brian, 2023. "Understanding domestic consumer attitude and behaviour towards energy: A study on the Island of Ireland," Energy Policy, Elsevier, vol. 181(C).
    2. Parag, Yael, 2021. "Which factors influence large households’ decision to join a time-of-use program? The interplay between demand flexibility, personal benefits and national benefits," Renewable and Sustainable Energy Reviews, Elsevier, vol. 139(C).
    3. Stute, Judith & Klobasa, Marian, 2024. "How do dynamic electricity tariffs and different grid charge designs interact? - Implications for residential consumers and grid reinforcement requirements," Energy Policy, Elsevier, vol. 189(C).
    4. Brewer, Dylan, 2023. "Household responses to winter heating costs: Implications for energy pricing policies and demand-side alternatives," Energy Policy, Elsevier, vol. 177(C).
    5. Javier Borquez & Hector Chavez & Karina A. Barbosa & Marcela Jamett & Rodrigo Acuna, 2020. "A Simple Distribution Energy Tariff under the Penetration of DG," Energies, MDPI, vol. 13(8), pages 1-17, April.
    6. Lang, Corey & Qiu, Yueming (Lucy) & Dong, Luran, 2023. "Increasing voluntary enrollment in time-of-use electricity rates: Findings from a survey experiment," Energy Policy, Elsevier, vol. 173(C).
    7. Wong, Pui Ting & Rau, Henrike, 2023. "Time of Use tariffs, childcare and everyday temporalities in the US and China: Evidence from time-use and sequence-network analysis," Energy Policy, Elsevier, vol. 172(C).
    8. Rezaeimozafar, Mostafa & Monaghan, Rory F.D. & Barrett, Enda & Duffy, Maeve, 2022. "A review of behind-the-meter energy storage systems in smart grids," Renewable and Sustainable Energy Reviews, Elsevier, vol. 164(C).
    9. Barjaková, Martina & Belton, Cameron & Purcell, Karl & Lunn, Pete, 2021. "Efficient ways of communicating time-of-use electricity tariffs in Ireland: Plain and simple," Papers WP704, Economic and Social Research Institute (ESRI).
    10. Humberto Verdejo & Emiliano Fucks Jara & Tomas Castillo & Cristhian Becker & Diego Vergara & Rafael Sebastian & Guillermo Guzmán & Francisco Tobar & Juan Zolezzi, 2023. "Analysis and Modeling of Residential Energy Consumption Profiles Using Device-Level Data: A Case Study of Homes Located in Santiago de Chile," Sustainability, MDPI, vol. 16(1), pages 1-32, December.

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