Dr michael pollitt

Too smart by half? Reducing household energy consumption and emissions

14 April 2011

The article at a glance

‘Smart measures’ will work to reduce household consumption as long as consumers use the technology to guide and adjust their consumption behaviours …

Dr michael pollitt

‘Smart measures’ will work to reduce household consumption as long as consumers use the technology to guide and adjust their consumption behaviours

Dr Michael Pollitt, Assistant Director of the ESRC Electricity Policy Research Group and Reader in Business Economics at Cambridge Judge Business School, says reducing household energy consumption is the challenge for us all but ‘smart measures’ are popular with consumers.

In a new expert comment podcast broadcast, Dr Pollitt explained that energy savings measures are popular with consumers and that self-regulation was the way forward to reach Green Deal targets.

A team of four young researchers at the Electricity Policy Research Group gave a presentation to the Cambridge Science Festival entitled ‘Too smart by half? Reducing household energy consumption and emissions’.

They were Adam Rysanek and Scott Kelly, both engineers, and two research economists, Laura Platchkov and Irina Shaorshadze. Dr Pollitt gives a flavour of what their research findings have come up with.

Dr Pollitt said: “The Government has agreed to a 10 year roll out of smart meters in every home for both electricity and gas with the intention of facilitating household energy emissions reduction.

“The key thing that came across in these four ‘Too smart by half’ presentations is that we are not going to build new efficient buildings and reach the government targets on new build in the time available. It is going to be about retrofitting existing buildings.

“Some of these high profile measures that we think of as reducing energy demand are not as cost effective as we think. Double glazing is very expensive in terms of up-front costs and is quite expensive in terms of the energy saving. Whereas some of the less flashy things like turning your thermostat down or lagging your hot water tank are actually much more cost effective.”

Dr Pollitt said consumers were spending relatively little on energy saving measures in their homes although they cost relatively little to implement:

“I think that actually to make serious inroads on our ambitious targets we do need to incur very high costs in the long term. The costs of £75 a year for each household are actually very low, and represent only a very small part of our energy bills at the moment but it is only likely to have a small effect. If we want to have a large effect we need to pay much more as a percentage of our bills towards energy efficiency methods and also renewable production.

“I think the lovely thing about energy efficiency methods is that they are usually unambiguous improvements that can be achieved at fairly low costs. The Green Deal has this rule that measures have to be self-financing, and very few of the government’s energy policies meet that sort of criteria. That is what makes the Green Deal so interesting.”

Dr Pollitt said smart meters were the way forward for consumers:

“Smart meters do pay if you respond to the information they give. You need to adjust your consumption behaviour and sign up to a smart tariff and a smart appliance. If you do these things then you do get savings. They are a facilitating technology and they will allow smart fridges, dish washers and washing machines that can respond to external price signals, but on their own they may have very little effect.

“The interesting thing from our research is that a significant number of people are willing to accept demand reduction measures for low compensation; there is a lot of good will towards these measures because they are associated with cost savings.”

But Dr Pollitt warned that consumers should be aware of how ‘rebound effects’ (taken by consumers) might mitigate the impact on climate change because they then spend their energy savings on other things that are not good for the environment:

“We don’t want some of these demand reduction methods to be just superficial actions people take on climate change. When we look at the whole lifestyle ‘rebounds’ it is a significant issue, and maybe up to 30 per cent of the original savings, may then be offset by what you do with the money. There is probably a net saving and it is probably significant and worth going after.”

He said ‘voluntary’ measures to reduce energy consumption were popular with consumers:

“The Government is very aware that voluntary demand response is a very popular policy. The last thing they would want to do is to tie the energy policy to ‘Big Brother’ lifestyles and force people to do things. They need to ensure they don’t push the demand side too far. In the Netherlands the government had to abandon a mandatory smart meter roll out. Smart regulation is the sort of regulation that people don’t necessarily see. People are conscious of demand side regulation.”

Dr Pollitt ended the podcast by setting out how we would live in 2030:

“There are two homes of the future: our retrofitted homes at the moment and the homes built in 2030 that will have all the new technology built into them. But we will see everybody with a smart meter and everybody signed up to smarter tariffs. With new homes the smartness is going on in the background, your thermostat will be self-adjusting, and everything will be done as automatically as possible for you.”