Carrots, Sticks and Other Smart Tricks Seth Blumsack Penn State - PowerPoint PPT Presentation

Carrots, Sticks and Other “Smart” Tricks Seth Blumsack Penn State University and Santa Fe Institute Other people whose tricks make me look smart: Paul Hines, Jason Clothiaux, Suman Gautam, Roger Mina Support from DOE and Green Mountain Power (nee Central Vermont Public Service) 1

Carrots for Smart Grid Tricks! • Research funded through a Smart Grid Investment Grant(SGIG) program to eEnergy Vermont, a utility consortium. • SGIG provided substantial ARRA funding for “smart grid” deployment, but DOE dangled carrots in front of utilities who were willing to conduct “consumer behavior studies.” 2

Carrots for Smart Grid Tricks! Download our reports here: https://smartgrid.gov/project/vermont_transco_llc_eenergy_vermont.html 3

Carrots and Sticks Source: Sanem Sergici, Brattle Group 4

eEnergy Vermont Experiment 5

eEnergy Vermont Experiment • RCT involving 3,735 GMP residential customers in Rutland; • Opt-in to enroll; opt-out at any time; • Event-based study with 24-hour notification of “peak days,” rate treatments: peak pricing, peak rebates and a transition group who started on a rebate and were moved to peak pricing; • Tech and no-tech groups; • Notification mode choices (phone, e-mail, text message); • Detailed pre/mid/post study surveys. 6

eEnergy Vermont Experiment 7

eEnergy Vermont Experiment Rate/Information-Treatment Technology-Treatment IHD Critical&Peak&Price&(CPP) No&IHD IHD Critical&Peak&Rebate&(CPR) No&IHD IHD CPR&in&Year&1,&CPP&in&Year&2 No&IHD Flat&Rate&w/Notification No&IHD Flat&Rate&w/o&Notification No&IHD ~ 4,000 customers involved in the pilot. A “Hawthorne” group was created but no Hawthorne effect detected. 8

The Carrot: Critical Peak Rebates (CPR) !$0.20!! !$0.10!! !$.!!!! 1! 2! 3! 4! 5! 6! 7! 8! 9! 10! 11! 12! 13! 14! 15! 16! 17! 18! 19! 20! 21! 22! 23! 24! !$(0.10)! Rate%($%per%kWh)% !$(0.20)! Regular!Rate! !$(0.30)! PTR!credit! !$(0.40)! !$(0.50)! Consumers are given a credit for measured reductions in electricity !$(0.60)! use during declared peak periods !$(0.70)! 9

The Stick: Critical Peak Pricing (CPP) !$0.70!! !$0.60!! Electric rate increases during declared peak periods, but is !$0.50!! slightly lower (relative to flat- Rate%($%per%kWh)% rate) during all other periods. !$0.40!! Regular!Rate! !$0.30!! CPP!Rate! !$0.20!! !$0.10!! !$#!!!! 1! 2! 3! 4! 5! 6! 7! 8! 9! 10! 11! 12! 13! 14! 15! 16! 17! 18! 19! 20! 21! 22! 23! 24! 10

In Home Device (Circa the Stone Age) 11

CPR, CPP and GMP • Some utilities have run pilot programs that use peak-time rebates. Others have used critical-peak pricing. • GMP was convinced to do both. This made their state regulator confused, and a little irritated. Aren’t peak prices and peak rebates basically the Image source: NPR same thing? Why punish the poor people of Vermont? 12

Framing Gains and Losses “The aggravation that one experiences in losing a sum of money appears to be greater than the pleasure associated with gaining the same amount.” - Kahneman and Tversky, 1979 • Avoiding a loss is somehow preferred to achieving a gain that is identical in magnitude. • Suggests that we should expect larger savings from CPP than CPR • Can ratepayers be trained to like the stick? Graphic: Annika Todd, LBNL 13

Data and Estimation ∑ ∑ DB DB ik ∑ DE DE ik ∑ DA DA ik ) y it = β + β j T ij + β k + β k + β k j k k k ∑ ∑ DE ( k ) ∑ ∑ DB ( k ) ∑ ∑ DB ( k ) T ij DB kt + T ij DE kt T ij DA kt + β jk β jk + β jk j k j k j k CD CD t + β t HI HI t + ε it + β t • 15-minute interval meter data for several thousand GMP residential customers in Rutland • Plus some socio-economic data (house size, appliance stock, income, education, household size, etc) 14

Weekday Load Shapes Blumsack, 11 Aug 2010 15

Event-Day Behavior, 2012 and 2013 IHD Customers, 2013 IHD Customers, 2012 Non-IHD Customers, 2012 Non-IHD Customers, 2013 16

Average Peak Time Load Reductions 0.00& !0.02& Average'Hourly'KW'Difference'During'Event' Hours'(Treatment':'No:No<fica<on'Control) ' CPR' Flat'Rate'w/ no<fica<on' !0.04& CPR+IHD' CPP' 5.3%& 6.5%& !0.06& 7.4%& 7.3%& !0.08& CPP+IHD' !0.10& !0.12& 14.1%& !0.14& !0.16& 17

Before/During/After Event 18

Monetary Savings Blumsack, 11 Aug 2010 19

So, What Did We Learn? Source: Sanem Sergici, Brattle Group 20

Capacity Value of Retail DR 10%% 2012%Events % % % %2013%Events% 0%% !10%% !20%% Flat%Rate%w/No8fica8on% CPR!CPR% !30%% CPR!CPR%w/IHD% CPP!CPP% CPP!CPP%w/IHD% !40%% CPR!CPP% CPR!CPP%w/IHD% !50%% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% %%9/12%%%%%%%%9/21%%%%%%%%9/25%%%%%%%%%10/5%%%%%%%%7/5%%%%%%%%%%7/15%%%%%%%%7/16%%%%%%%%7/17%%%%%%%%7/18%%%%%%%%7/19%%%%%%%%8/13%%%%%%%8/21%%%%%%%%8/22%%%%%%%%%8/28% %%%%78°%%%%%%%%%%%69°%%%%%%%%%%65°%%%%%%%%%%%%70°%%%%%%%%86°%%%%%%%%%%%%88°%%%%%%%%%%87°%%%%%%%%%%%89°%%%%%%%%%%87°%%%%%%%%%%%90°%%%%%%%%%%68°%%%%%%%%%82°%%%%%%%%%%%82°%%%%%%%%%%%%83°% 21

How Not to be Popular! 400 No. of customers 300 200 100 0 100 CPR 80 CPR+IHD Percent 60 CPP CPP+IHD 40 CPR � CPP CPR � CPP+IHD 20 Control 0 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 9/13 Month 22

How Not to be Popular! 400 No. of customers 300 200 Who dropped out??? • Receive Peak-Time 100 Notification by Phone 0 • Younger Customers 100 • Large Households CPR 80 CPR+IHD Percent 60 CPP CPP+IHD 40 CPR � CPP CPR � CPP+IHD 20 Control 0 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 9/13 Month 23

How Not to be Popular! 400 No. of customers 300 200 Period of 100 interim surveys 0 100 CPR 80 CPR+IHD Percent 60 CPP CPP+IHD 40 CPR � CPP CPR � CPP+IHD 20 Control 0 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 9/13 Month 24

Actions Reported 100% Proportion(of(Customers(Who(Reported(Taking(Each(Action 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% CPR CPR+IHD CPP CPP+IHD Flat7Rate7 w/Notification Thermostat7Settings Turn7off7Lights Appliance7Timers Delay7Laundry Delay7Cooking Adjust7Air7Conditioning 25

Efficacy-Popularity Frontier 16% Average Peak Time Demand Reduction CPP + IHD 14% 12% 10% 8% CPP CPR + IHD 6% Notification Only CPR 4% 2% 0% 0% 5% 10% 15% 20% 25% Proportion Viewing Pilot Favorably 26

How Do Consumers Value Smart Grids? “They knew where we were when we had power outages” Monetary Improvement in Savings Service 41% 40% --GMP customer (without IHD) Like Conserving Energy Like the IHD 14% Technology 5% 27

Words Are Worth a Thousand Pictures CPP Customers CPR Customers 28

Utility Lessons Sticks work better than carrots… …but sticks are unpopular, especially after dangling carrots before customers/regulators. Customers DO respond to incentives… …but not persistently enough to have much (retail) capacity value. Information CAN be useful… …but the supporting systems need to become as EASY as making coffee. 29

A Final Musing • Why do households care about the carrot or the stick? • GMP customers each saved tens of cents during every peak event! • What motivates customers? Does the penny make the conservation choice more or less complicated? 30

Thank You! Seth Blumsack blumsack@psu.edu 31