UNDP Moldova aims to reduce electricity consumption in one of the biggest behavioral experiments in Europe
What if you… are the least energy efficient neighbor on the floor?
Posted September 30, 2019
No country in the world will be spared the negative impacts of climate change.
Worldwide greenhouse gas emissions are growing at a rapid speed. In recent years, the effects of the climate crisis have become increasingly visible and global leaders are accelerating their efforts to mitigate climate change and reduce GHG emissions. Against this background, UNDP is providing support to countries to accelerate the enhancement of national climate pledges by 2020 and to develop new ways of mobilizing all people to inform climate action. Similarly, large corporations like Google, Microsoft, Siemens and others adopt climate responsive optic and set zero emission targets. But is this enough? Are we moving fast enough to cope with climate change? What more can governments, companies, and individuals do?
We at UNDP Moldova discuss this question regularly. Our dependence on electricity, both physical and psychological, is one piece of the puzzle. Our phones, homes, cars, industries and urban environments are highly dependent on electricity. Republic of Moldova is highly dependent on energy imports, which currently accounts for more than two thirds of primary energy supply. Of the 3.7 billion kilowatt -hours (kWh) of electricity used in 2017 only 18% was generated domestically, while the rest of 82% was imported and purchased. To power country’s economic growth, the electricity demand has increased from 267 ktoe in 2010 to 297 ktoe in 2017, and this trend continues to grow. Chisinau, the capital city, is by far the biggest consumer of electricity in the country and its residential sector consumes its largest share. According to Gas Natural Fenosa Furnizare Energie – the biggest energy supplier in the country – electricity consumption could be improved by about 10% if the right policy and regulatory frameworks would be in place.
But how easy is to encourage the reduction of electricity consumption in a non-intrusive and sustainable manner? Could individual households contribute to accelerating the achievement of climate related SDGs?
The scientific literature is rich and provides multiple examples of rigorously-tested interventions shown to reduce household electricity consumption. Policy measures and incentives tested in different markets (primarily in developed countries) include carbon taxes, cap-and-trade programs, subsidies for energy, efficient goods and so on. In parallel to the ‘price-based’ solutions, there are also ‘behavioral’ approaches that have been tested in several countries. A good example and one of the most robust experiments is the OPOWER initiative deployed in US, which became famous for demonstrating that consumption could be lowered by approximately 2% through sending households individual energy reports that compared their energy consumption to “energy efficient neighbors” to encourage energy savings. It is believed that this sort of behavioral intervention is one of the most cost-effective opportunities to reduce GHG emissions, if the power production process with GHG emissions generation.
In 2018, inspired by the upcoming Climate Action Summit 2019 and the OPOWER experiment that showcased how electricity consumption can be reduced by making use of social norms, UNDP Moldova launched a large behavioral experiment, kindly backed up by Gas Natural Fenosa Furnizare Energie, the electricity supply company.
To start, we conducted pre-experiment ethnographic research. Talking to Chisinau residents revealed some of the reasons why citizens are not able to save electricity. Though our learnings did not apply universally, we found a few patterns when talking to residents:
- Residents have a lack of knowledge about interlinkages/nexus between electrify use, GHG emissions and the associated climate consequences.
- Most people could not suggest simple ways they might be able to reduce electricity without affecting much their daily activities and/or comfort.
- Most people were unaware of the minimum and maxim thresholds of electricity consumption in their building.
- Residents usually knew how much they were charged for electricity consumption, but were unaware of how many kWh they used.
After ethnography, we made use of the behavioral science literature. UNDP Moldova, Gas Natural Fenosa Furnizare Energie, and The Behavioural Insights Team co-designed two micro-level household letters using insights from behavioral science. The letters encouraged individual households in Chisinau to save electricity. Both letters used a social norm comparison to highlight the excess of electricity consumed by household if compared to an “energy-efficient neighbor.”
More specifically, one letter presented the amount of electricity in kilowatt hours consumed by an “average energy-efficient neighbor.” This version of the letter replicated the key features of the OPOWER social norm intervention in a novel economic and geographic context. The second letter presented how much more money, in Moldovan Leu (MDL), a household spent on electricity compared to an “energy-efficient neighbor” (see screenshot of the partial letter below). As far as we know, this is a novel iteration on the social norm comparison letters aimed at electricity conservation shared in the literature. Both letters also contained information about energy saving behaviors that could potentially help to reduce electricity consumption in household.
After designing our letters, Gas Natural Fenosa Furnizare Energie identified about 127,000 energy intensive households, exceeding electricity consumption average during the first quarter of 2019. The identified households were then randomly split into three groups. Two groups of about 10,000 households each have received one of the behaviorally informed letters. For comparison’s sake, a control group of about 107,000 households were randomly assigned to receive no letter, as households currently do not receive letters from Gas Natural Fenosa Furnizare Energie apart from their monthly bills.
We found that households that received behaviorally informed letters reduced their electricity usage by approximately two percent in the month following compared to households that did not receive the letter. The results of the experiment are encouraging and had similar effect size to other similar behavioral interventions in the literature, including Opower. All in all, a simple, low cost, well-targeted letter accompanying the monthly bill managed to reduce energy consumption. To provide a quantitative result of our experiment in total, the households in “kWh Norm” Group and “Monetary Norm” Group conserved 41,059 kilowatt-hours of electricity compared to those who did not receive the letter. This represents the households saving 73,496 MDL ($4,112.40) in energy costs and eliminating the equivalent of 27,920 kg of CO2 emissions in one month.*
Given these promising results, we think the letter is a promising candidate for scale. We will now study the possibility of sending this letter to a larger group of households that are using an above-average amount of electricity.
Here are our lessons learned:
- A social norms-based awareness letter on electricity saving can immediately stimulate residents to adjust their electricity consumption behavior.
- Comparing the consumption of individual households to their most efficient neighbors and nudging people to use specific energy saving measures proved to be an effective low-cost tactic.
- The support received from the local energy supply was a necessary for the success of the experiment and could lead to further scale-up to all households in Chisinau and beyond.
While we study whether to scale up the experiment, we plan to further monitor the electricity usage of the households involved in the experiment and analyze whether they will change or maintain the same energy saving pattern. Additionally, based on the results of our behavioral intervention, we also want to explore policy innovations. The current policy and regulatory frameworks are neutral and do not provide any direct or indirect incentives for households to adapt better behaviors. Expanding the experiment to a national scale would need to be associated with additional governmental incentives to maximize the effects.
The experiment was funded through the 2018 UNDP Global Innovation Facility, implemented in partnership and with financial contribution from Gas Natural Fenosa Furnizare Energie and analytical support from The Behavioural Insights Team.
* Fenosa’s internal CO2 intensity estimates show that 0.68 kg of CO2 are produced as a byproduct for every kWh of electricity produced
Key contributors: Andrea Cuzyova (UNDP Moldova, Deputy Resident Representative), Jose Luis Gomez Pascual (Country Manager, Gas Natural Fenosa Moldova), Dumitru Vasilescu (UNDP Moldova, Policy Specialist), Milica Begovic (UNDP Eurasia, Innovation Specialist), Michael Kaemingk (Behavioral Insights Team, New York Office), Jin Han Kim (Behavioral Insights Team), Inga Podoroghin (UNDP Moldova Climate Change, Environment & Energy Programme Specialist), Khatuna Sandroshvili (UNDP Eurasia, Innovation Lead), Ana Moraru (UNDP Moldova, Junior Policy Specialist), Otilia Vlasov (UNDP Moldova, MiLab Communications Officer), others.