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Are consumers willing to switch to smart time of use electricity tariffs? The importance of loss-aversion and electric vehicle ownership

Nicolson, M; Huebner, G; Shipworth, D; (2017) Are consumers willing to switch to smart time of use electricity tariffs? The importance of loss-aversion and electric vehicle ownership. Energy Research & Social Science , 23 (C) pp. 82-96. 10.1016/j.erss.2016.12.001. Green open access

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Abstract

Smart time of use tariffs are a key part of most government’s strategies to ensure our future electricity supply is clean, affordable and secure – but will consumers be willing to switch to them? This paper presents the results of a survey experiment conducted on a nationally representative sample of 2020 British energy bill payers. The data suggests that over a third of bill payers are in favour of switching to a 3-tiered smart time of use tariff, indicating a sizeable potential market for these tariffs. There is substantial variation in willingness to switch, driven by differences in loss-aversion and ownership of demand flexible appliances rather than standard socio-economic/demographic factors. This is the first time loss-aversion has been measured amongst energy bill payers and the results suggest loss-aversion is likely to stifle consumer uptake; 93% of bill payers are loss-averse (care more about avoiding financial losses than making savings) and loss-averse people are substantially less willing to switch to the time of use tariff (p < 0.001). A randomised control trial finds that loss-framed messages are unlikely to overcome loss-aversion to boost uptake. Marketing campaigns tailored towards electric vehicle owners, who were significantly more willing to switch, could increase uptake during and after the smart meter roll-out.

Type: Article
Title: Are consumers willing to switch to smart time of use electricity tariffs? The importance of loss-aversion and electric vehicle ownership
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.erss.2016.12.001
Publisher version: http://dx.doi.org/ 10.1016/j.erss.2016.12.001
Language: English
Additional information: © 2016 The Author(s). Published by Elsevier Ltd. Published by Elsevier Inc. This is an open access article under the Creative Commons Attribution 4.0 International (CC BY 4.0) license (http://creativecommons.org/licenses/by/4.0/)
Keywords: Demand-side response; Time of use tariffs; Loss aversion; Behavioural economics; Domestic; Electric vehicles
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Bartlett School Env, Energy and Resources
URI: https://discovery.ucl.ac.uk/id/eprint/1541213
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