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The Key to Energy Conservation? Priming Consumers with Price | Tuck School of Business

What they discovered was quite surprising. The only form of communication that had any impact on reducing electricity consumption during peak periods was the one that conveyed pricing information; the households pretty much ignored everything else. But the pricing appeal did make a significant impact: the households in the pricing group reduced their electricity usage by 14 percent, and about three-quarters of that reduction can be attributed to them turning down, or turning off, their air conditioning. A third significant finding is related to the pricing appeals about the lower nighttime prices. The appeal merely notified customers of the reduced price, and people began re-arranging their daily schedules to take advantage of it. “We could see that people began washing their clothes more between 10 p.m. and 6 a.m., and using the furnace more during that time,” Kopalle explained. “They were able to shift their loads to the off-peak periods.”

Inside this finding was another important discovery: households in the pricing group who had electric vehicles seemed to have programmed their cars to charge after 10 p.m., with most of the charging occurring just before 5 a.m. “This pattern of price-induced electric vehicle load shifting towards the early morning hours when wholesale electricity prices are low and away from the evening hours when prices are high is to the best of our knowledge a new result,” the authors write. “It holds great promise for pricing strategies to improve economic efficiency in a transportation system reliant on electric vehicles.”

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Tuck School of Business | The Key to Energy Conservation? Priming Consumers with Price.

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