Energy Efficiency, How Much Are Behavioral Measures?

Among the companies in the Italian energy sector, the realization that energy efficiency does not mean installing a technology, but providing a "turnkey" service acting also on people. The reason, following the teachings of behavioral economics, lies in the "myopia" of energy consumers compared to the benefits of efficiency measures. This "limited economic rationality" translates into limited investment (even by business), generally inefficient use of resources and production facilities, and non-strategic energy management. On a more general level, relying solely on technology does not guarantee the achievement of national and European energy efficiency objectives.

Acting on consumption habits is logical because none of us is a homo oeconomicus, who is a perfectly rational person whose goal is the maximization of his utility through a very efficient use of the resources at his disposal. This hypothesis was scientifically founded by the experimental work of Nobel economics Richard Thaler, who, through the study of less rational behavior in the field, developed some of the tools needed to induce and modify them . These tools, when they affect energy consumption, take the name of behavioral measures for EE.

Behavioral measures are strategies and tools that, through the theories of behavioral sciences (economic and psychological), have the stated goal of inducing structured changes in the energy consumption patterns of individuals. users (people and companies). Here are some examples:

• Provide accurate information on how the neighbor is more efficient than us. In the United States, these measures are widely used by utilities and have generated an average economy of 2%, apparently low, but high when compared to the relatively low cost to businesses.
• Have a reference figure that helps us improve our energy performance at home and at work. Conditioning the behavior of workers by the mediation of "energy champions" can generate significant savings and at a reduced cost (a production bonus for the figures responsible for the measure);
• A structured energy management system certified for industrial processes, such as the ISO 50001 certification, capable of generating savings of 20% in the medium and long term compared to a codified implementation by a recognized regulation at the European level.

According to a first estimate and a rough estimate by us, the potential impact of these measures and other behavioral measures in Italy could be between 2.32 Mtoe / year and 14, 44 Mtoe / year of lower final energy consumption. In this wide range, the actual level depends on the type of MC adopted, the scale of interventions and the success rate of applications (0.8 – 2 Mtep / year in the transport sector, 0.64 – 6 , 08 Mtep / in the residential, 0.52 – 5.46 Mtoe / year in the industry and 0.36 – 0.9 Mtoe / year in the services and agriculture sectors). Overall, therefore, it would be an important contribution to achieving the objectives of the drafting of the Climate Energy Plan.

The theme of behavioral measures was further explored by us at a seminar entitled "MCs and Energy Efficiency: From Policy to Trade Strategies", July 4, 2018. The in camera meeting, at which badisted qualified representatives of companies, institutions and academies, clearly confirmed that the MC would be the future of energy efficiency.

Numerous features and benefits emerged during the seminar that make behavioral measures essential for the future of energy efficiency and utilities, and in particular:

• The relatively high realization costs low. These are "soft" measures that do not require large investments in factories or networks. Indeed, the phases that constitute the activation of a behavior change strategy do not require large capitalization investments. At the same time, however, in a first "test" phase, some investments may not yield the expected results
• The time to market is short and the energy savings are almost immediate. The initial phases of the intervention definition are based on already consolidated models and a few months are needed to develop new ones. The savings begin from the first day of activation and reach after a short time a "plateau" on which they are installed. However, the plateau must be consolidated over time and this requires "keeping alive" the effects through continuous measures and targeted interventions.
• Some skills are already present in marketing and successful collaborations with research centers can be activated. The added value of the research center lies in skills in managing social experiences and complex measurement systems such as counterfactual management. However, marketing is not enough and other skills, especially on segmentation, need to be collected at universities or in innovative start-ups.
• Enabling technologies are in part already widely adopted in Italy. We are talking here about smart meters and other sensors, cloud computing, algorithm badysis systems, connected thermostats and communication systems such as e-mails and push notifications. As we see, technologies are nothing but a means and excessive complexity may create an additional barrier if the necessary skills are not simultaneously provided.
• They fall into an incentive system and help to enrich information and improve customer loyalty. Direct returns are very significant, especially if the savings are converted to EES, but they are not a reliable source of revenue.

Public services must therefore intervene on the behavior of consumers if they want to overcome the obstacles that delay the adoption of EE. To do this, they must integrate marketing skills with additional cross-functional skills, as defined by Venier. Public services must learn the economics and behavioral psychology and the ability to manage social experiments in the laboratory and in the field, especially the management of counterfactual tests. All Supported by Monitoring, Communication, Automation, and Analysis Technologies

The benefits to utilities are not limited to energy efficiency. For example, the adoption of water demand management (WDM) is encouraged in the US water sector; As described in the report of the Observatory for a Sustainable Water Industry, WDM is a series of practices that exploit behavioral levers, through communication and education, to reduce the demand for water. In this way, it is possible to contract the consumption of resources and improve their management and without having to intervene on pipelines or distribution networks.

Remember that the PMs have in their human being the origin, the means and the finality; therefore, each intervention must be weighed with caution and awareness. The modalities for the application of the CM are still evolving and to give the interventions a solid footing we must act with caution. At the same time, however, it is a dynamic area, a first engine could guarantee a constant competitive advantage over its competitors.

We agree with Venier's point of view: This paradigm requires the contribution of all actors in the energy efficiency chain, especially the architects of choice – the institutions responsible for development. from EE in Italy. They are asked to give more stability to the TEE system, which is essential to reduce the resistance to EE and conclude the excellent work that has led Italy to the first place in the ACEEE clbadification energy efficiency.

* Stefano Clerici, author of this article, is Senior Consultant at Agici Finanza of Impresa (Cesef), a consulting and research firm specializing in the utilities sector.