Smart Meter Devices and the Effect of Feedback on Residential Electricity Consumption: Evidence from a Natural Experiment in Northern Ireland
University of Maryland - AREC
University of Maryland - Department of Agricultural & Resource Economics; Fondazione Eni Enrico Mattei (FEEM)
Queen's University Belfast - Institute of Agri-food and Land-Use School of Biological Sciences
June 15, 2011
FEEM Working Paper No. 36.2011
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.
Number of Pages in PDF File: 50
Keywords: residential energy, electricity demand, feedback, smart meter, information
JEL Classification: Q40, Q41, D8working papers series
Date posted: June 15, 2011
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