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An Informational Nudge to Shave Peak Demand

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  • Gilbert E. Metcalf

Abstract

Informational nudges to encourage energy conservation or load shifting have been tried in various contexts. This paper studies a program run by a small municipally owned electric utility to reduce demand on certain peak demand days. An email alert is sent out to residential customers who sign up for the alerts. Some recipients of those alerts forward the alerts to other customers or community groups, making it difficult to determine how broadly the alerts are disseminated. The alerts encourage load shifting and energy saving during specific hours on the following day. Using hourly load data for the utility, I estimate the reduction in electricity load caused by the alert emails. Using an instrumental variables approach, estimates suggest that load is reduced by roughly 0.7 MWs per hour during the hours covered by the alert. This works out to a reduction in load on the order of 2 percent. I calculate the cost savings to the municipal utility and discuss social and private benefits of the program. The private benefits of the peak alert program swamp the social benefits.

Suggested Citation

  • Gilbert E. Metcalf, 2025. "An Informational Nudge to Shave Peak Demand," NBER Working Papers 34089, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34089
    Note: EEE
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    More about this item

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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