Incentive Infographic | Energy Manager Today

Study’s Big Lesson: Always Test Proposed Programs

Incentive Infographic | Energy Manager Today

Despite the fact that a study described today in Forbes focuses on the habits of residential users, it offers lessons to which businesses should pay close attention.

The study suggests that financial rewards may not be effective as a way to encourage participation in energy efficiency programs, according to by Anant Sudarshan, who conducted the study and wrote the commentary at the site.

The study found that energy efficiency programs that didn’t feature financial rewards led residential customers in India to cut use by as much as 7 percent. The surprising thing, however, is that adding financial incentives led to reduced participation.

Sudarshan suggests that the initial positive response was due to the fact that people trust their neighbors and want to “keep up with the Joneses.” The addition of utility largesse to the mix, however, leads to other thoughts:

Households reacted entirely different when they were told they would receive money for reducing their energy use. It seems counterintuitive. But, a fundamental distrust in “big brother”—whether that be the government, or in this case, a utility—may have kicked in.

Households questioned the underlying motivations: “Why is a utility paying me? What’s in it for them? And, is it going to cost me in the end?” In reality, there was no hidden agenda on the part of the utility. But households didn’t trust that. So, they didn’t participate in the program, and they didn’t save.

The big lesson from the study is to test everything, even things that seem like “no-brainers:” Who would have thought, after all, that adding a financial incentive would kill a program? Of course, businesses are more likely to think things through than residential users. However, business decisions are made by people, and human nature plays a role.

Lancaster Farming reports that The Delaware Sustainable Energy Utility (DESEU) has launched Energize Delaware. The program, the story says, offers audits, low-interest loans, energy efficiency grants, solar renewable energy credits and other benefits.

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