Smart Meter Devices and The Effect of Feedback on Residential Electricity Consumption: Evidence from a Natural Experiment in Northern Ireland
Will Gans, AREC, University of Maryland, College Park
Anna Alberini, AREC, University of Maryland, College Park and Fondazione Eni Enrico Mattei, Venice
Alberto Longo, Gibson Institute for Land Food and Environment, UKCRC Centre of Excellence for Public Health (NI), School of Biological Sciences, Queen‘s University, Belfast
Using a unique set of data and exploiting a large-scale natural experiment, we estimate the effect of real-time usage information on residential electricity consumption in Northern Ireland. Starting in April 2002, the utility replaced prepayment meters with “smart” meters that allow the consumer to track usage in real-time. We rely on this event, account for the endogeneity of price and plan with consumption through a plan selection correction term, and find that the provision of information is associated with a decline in electricity consumption of up to 20%. We find that the reduction is robust to different specifications, selection-bias correction methods and subsamples of the original data. At £15-17 per tonne of CO2e (2009£), the smart meter program delivers cost-effective reductions in carbon dioxide emissions.
Will Gans, Anna Alberini, and Alberto Longo,
"Smart Meter Devices and The Effect of Feedback on Residential Electricity Consumption: Evidence from a Natural Experiment in Northern Ireland"
(May 25, 2011).
Fondazione Eni Enrico Mattei Working Papers.
Working Paper 587.