Determinants of Demand Response Program Participation: Contingent Valuation Evidence from a Smart Thermostat Program

Jesse Kaczmarski, Benjamin Jones and Janie Chermak
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Jesse Kaczmarski: Department of Economics, The University of New Mexico, 1915 Roma Ave. NE 1019 ECON 1006E, Albuquerque, NM 87131, USA

Energies, 2022, vol. 15, issue 2, 1-18

Abstract: As renewable electricity generation continues to increase in the United States (US), considerable effort goes into matching heterogeneous supply to demand at a subhour time-step. As a result, some electric providers offer incentive-based programs for residential consumers that aim to reduce electric demand during high-demand periods. There is little research into determinants of consumer response to incentive-based programs beyond typical sociodemographic characteristics. To add to this body of literature, this paper presents the findings of a dichotomous choice contingent valuation (CV) survey targeting US ratepayers’ participation in a direct-load-control scheme utilizing a smart thermostat designed to reallocate consumer electricity demand on summer days when grid stress is high. Our results show approximately 50% of respondents are willing to participate at a median willingness-to-accept (WTA) figure of USD 9.50 (95% CI: 3.74, 15.25) per month that lasts for one summer (June through August)—or slightly less than USD 30 per annum. Participation is significantly affected by a respondent’s attitudes and preferences surrounding various environmental and institutional perspectives, but not by sociodemographic characteristics. These findings suggest utilities designing direct-load-control programs may improve participation by designing incentives specific to customers’ attitudes and preferences.

Keywords: demand response; direct load control; incentive-based; willingness to accept; contingent valuation (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (5)

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