The drive to reduce electricity consumption worldwide is key to reaching net zero. But how can policymakers encourage people to change the comfortable habits of a lifetime and embrace energy-efficient practices, for the sake of the greater good?
“Human behavior is influenced by a variety of factors, psychological, social and economic,” says KAPSARC Research Fellow Abdulelah Darandary. “People are not always rational decisionmakers, and so a multi-pronged approach is often needed to encourage individuals to change their behaviors.”
Tapping into what makes people tick
Recent research has shown that encouraging behavioral change plays a significant role in reducing energy consumption in residential areas. Governments and policymakers therefore need to tap into the most effective ways to encourage their residents to change their energy-use patterns and their attitudes to saving electricity. For example, they could motivate individuals to change by carefully leveraging social norms and expectations, providing economic incentives, or using educational interventions and alert messaging services. However, the responses of different populations and social groups to such incentives vary widely.
“Combining methods and policies can create more robust and lasting behavioral change than traditional policies do on their own,” says Darandary.
Inspired by this, Darandary, alongside fellow KAPSARC economists Fateh Belaïd and Hossa Almutairi, came up with a plan to develop a framework for designing behavioral interventions to target energy use in Saudi Arabia. Their framework aims to inform future pilot studies and policies.
“The timing of this study is crucial, aligning with Saudi Arabia’s Vision 2030 goals,” says Almutairi. “It aims at rationalizing energy use, diversifying the energy mix, and achieving significant energy savings through behavioral interventions.”
“Combining methods and policies can create more robust and lasting behavioral change than traditional policies do on their own.”
Abdulelah Darandary
The need for fresh incentives
Oil-exporting countries such as Saudi Arabia have an added reason to reduce residential energy consumption. By conserving energy, these countries can boost future exports.
Energy efficiency behaviors have been a lead focus for the Saudi government since it established the Saudi Energy Efficiency Center (SEEC) in 2010. The Center has spearheaded initiatives including the creation of energy efficiency standards and clear consumer labelling for vehicles and electrical equipment.
“There were also direct government interventions to curb rising energy consumption through energy price reforms in 2016 and 2018,” says Belaïd.
Many traditional policy levers have already been used, and new mechanisms are needed to sustain progress on the path to optimal energy efficiency, according to Darandary. “Our study addresses that need, proposing novel strategies for influencing consumer behavior in ways that complement past policy efforts,” he says.
A framework for success
The team’s framework outlines the key steps involved in building robust, well-designed pilot studies that can help determine the best courses of action for any given population. They also offer advice on data analysis and advocate the use of randomised controlled trials (RCTs) for pilot policy schemes. In such a trial, each randomly selected group of participants is given a specific intervention, and the success of each is then measured against the behaviours of a control group. This enables causal relationships to be identified and helps to define the leading motivational drivers within given populations.
To showcase this, the KAPSARC researchers conducted their own RCT on the Kingdom’s residential energy use in 2023. They analyzed a large dataset of more than 65,000 households equipped with smart meters and created randomized sample groups that received different nudges to change their electricity consumption.
“We tested various nudges, such as peer-to-peer comparisons and high-alert messaging,” says Almutairi. “The results were promising, with preliminary findings showing that these interventions do indeed reduce energy consumption. The findings also confirmed that non-finance-related interventions could effectively influence consumer choices at a reasonably low cost to the government.”
Additionally, the results indicate that behavioral interventions can effectively complement existing economic measures, which the team hopes will drive significant energy savings.
The full results of the RCT will be published in an upcoming research paper.
“Our findings have already motivated a scaling-up process, with Saudi policymakers considering taking certain behavioural interventions nationwide,” says Darandary.
Encouraging change in the Saudi Arabian population
Approaches to behavioral change may differ in effectiveness across countries due to varying cultural, social, and economic contexts. In Saudi Arabia, highlighting social norm comparisons may be particularly effective because of the strong community orientation.
“These beliefs may differ from other cultures where individualism and personal choice play a more significant role in decision-making,” adds Darandary. “Countries with more individualistic cultures might respond better to financial incentives or personal feedback mechanisms. This is why it is important to first conduct considered pilot studies, to validate your perceptions before attempting mass policy adoption.”
Room for improvement
The KAPSARC team acknowledges the limitations that hinder the design of certain behavioural interventions. For example, providing tailored energy-saving tips, based on individual energy-consumption patterns, would likely be more effective than generic information messages for a mass audience. These messages and tips could be based on specific energy-use patterns gleaned from people’s smart meters.
In a similar vein, the Saudi Electricity Company (SEC) already offers a mobile app tool that can provide customers with peer-to-peer feedback, showing how each individual’s energy consumption fares in comparison to others in their local community. However, the drawback is that this information is only available to those consumers who actively engage and download the app.
Ensuring truly random selection of participants is key to these studies. If individuals are already keen to reduce their energy footprint before taking part, these groups may skew the results of any given intervention’s success.
“We hope that the findings from the RCT pilot will spark a new approach to policy creation, especially in behavioral economics,” says Darandary. “By encouraging this type of thinking and analysis, we aim to establish clear causal links between incentives and subsequent behaviours that can be communicated to policymakers, demonstrating the effectiveness of various policy changes.”
Looking to the future
The team is directly involved in ongoing, in-depth research to shape future energy policies in Saudi Arabia, particularly through collaborations with SEC. Future research will focus on finalizing the pilot study findings and developing mechanisms to scale up the interventions.
“We plan to conduct cost-benefit analyses to assess the economic and environmental impacts of energy savings in the experiment we performed,” says Darandary. “If possible, we will also explore how applicable these interventions are to other sectors, such as commercial and industrial energy consumption.”
The team also aims to integrate behavioral economics interventions with strategies related to energy demand management. “This will complement the growing digitization of electricity systems, particularly with the increasing adoption of solar and other renewable technologies,” concludes Darandary.
Reference
Almutairi, H.; Belaïd, F., & Darandary, A. Decarbonizing Saudi Arabia’s residential sector: Designing behavioral interventions for efficient and sustainable energy consumption. KAPSARC (June 2024) Article
