Behavioral economics meets demand-side management

Posted on July 5, 2014  /  0 Comments

We’ve been arguing that electricity is up for a major change and that the change is going to be driven by the infusion of ICTs into all aspects of electricity generation, transmission, distribution and supply. Here’s another example. Hopefully this does not require smart meters and that high consumption devices in our countries can work with the gizmo.

IT’S July, and it’s starting to get hot. This month last year — on Friday, July 19, 2013 — New York City broke its electricity usage record. The demand strained Con Ed’s grid until it broke. Within hours, 5,200 Bronx residents were without power. And as more heat rolled in, the blackouts did too, in Washington, Baltimore, Philadelphia and Boston — no major metropolitan area on the East Coast was spared. Earlier that summer, California, Texas, Illinois and other states fought the same battle with heat-driven peak demand. Canada, Japan, India, Nepal and virtually the entire world face the same issue.

We have the technology to eliminate these blackouts. We’ve had it for years.

It works like this: Your utility installs a small radio device near your air-conditioner that can receive a signal from the power company when there’s a risk of a blackout. When the signal is sent, the device raises the temperature a bit, and, while you go about your business in the slightly less-air-conditioned comfort of your home, all those devices together ease the pressure on the system. In tests, most participants aren’t even aware that the device has been activated. Without noticing a thing, you’ve helped prevent a blackout.


It appears that the single biggest barrier is consumers who fail to respond to requests to permit the device to be installed on their air conditioners. The scientists who wrote the piece think they have the solution. Behavioral economics. Read it.

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