Effect of Monetary Incentives on the Demand for Electricity of Domestic Consumers – Case of Israel
This research, based on a pilot study performed by the Israeli Electricity Company (IEC) in the framework of a demand management arrangement, focused on an economic approach for influencing domestic customers’ electricity consumption. The main objectives were to find out if monetary incentives in th...
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doaj-10a574a8c69a41c88bf1a501a55319e82021-09-05T14:00:11ZengSciendoReview of Economic and Business Studies2068-72492018-06-0111113116210.1515/rebs-2018-0068rebs-2018-0068Effect of Monetary Incentives on the Demand for Electricity of Domestic Consumers – Case of IsraelElbaz Shimon0Zaiț Adriana1Alexandru Ioan Cuza University of Iasi, Faculty of Economics and Business Administration, Iasi, RomaniaAlexandru Ioan Cuza University of Iasi, Faculty of Economics and Business Administration, Iasi, RomaniaThis research, based on a pilot study performed by the Israeli Electricity Company (IEC) in the framework of a demand management arrangement, focused on an economic approach for influencing domestic customers’ electricity consumption. The main objectives were to find out if monetary incentives in the form of a constant discount in the household consumer’s electricity bill (with no connection to consumption levels) influence consumers participating in a demand management arrangement with their electricity provider (here the IEC) and if such an incentive will lead to a decrease in the participants’ electricity consumption and/or a shift in their consumption from peak to low demand hours. The study examined also the monetary incentive’s influence on the participants’ willingness to join a future arrangement. The findings show that the participants who received a constant incentive increased their consumption, contrary to the expected behaviour, suggesting the presence of a “rebound effect”. One of the incentives that predicted a tendency to save electricity was the pro environmental attitude of the consumer, whereas financial incentives did not predict a tendency to save electricity. Damage to consumer comfort caused by load shedding exerted no significant influence. The economic incentive of a discount in the electricity bill increased the consumers’ willingness to join a future arrangement, even at the cost of compromising their privacy, although the possibility that this arrangement would lead to the loss of their control of home electric appliances as a result of load shedding drastically decreased this willingness. A positive financial incentive was found to have a minor influence on consumers’ willingness to participate in a demand management arrangement, while a negative incentive (the wish to avoid fines) was found to be very influential. Comparing to previous studies, the results are mixed, confirming some previous findings and contradicting others – and they offer an important contribution for the worldwide debate on energy conservation and household electricity reduction, through the Israeli dimension in a complex puzzle.https://doi.org/10.1515/rebs-2018-0068electricity demanddemand-side managementsmart gridrebound effectmonetary incentiveconsumer behaviourhousehold electricity consumptionm21m38q40h41 |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Elbaz Shimon Zaiț Adriana |
spellingShingle |
Elbaz Shimon Zaiț Adriana Effect of Monetary Incentives on the Demand for Electricity of Domestic Consumers – Case of Israel Review of Economic and Business Studies electricity demand demand-side management smart grid rebound effect monetary incentive consumer behaviour household electricity consumption m21 m38 q40 h41 |
author_facet |
Elbaz Shimon Zaiț Adriana |
author_sort |
Elbaz Shimon |
title |
Effect of Monetary Incentives on the Demand for Electricity of Domestic Consumers – Case of Israel |
title_short |
Effect of Monetary Incentives on the Demand for Electricity of Domestic Consumers – Case of Israel |
title_full |
Effect of Monetary Incentives on the Demand for Electricity of Domestic Consumers – Case of Israel |
title_fullStr |
Effect of Monetary Incentives on the Demand for Electricity of Domestic Consumers – Case of Israel |
title_full_unstemmed |
Effect of Monetary Incentives on the Demand for Electricity of Domestic Consumers – Case of Israel |
title_sort |
effect of monetary incentives on the demand for electricity of domestic consumers – case of israel |
publisher |
Sciendo |
series |
Review of Economic and Business Studies |
issn |
2068-7249 |
publishDate |
2018-06-01 |
description |
This research, based on a pilot study performed by the Israeli Electricity Company (IEC) in the framework of a demand management arrangement, focused on an economic approach for influencing domestic customers’ electricity consumption. The main objectives were to find out if monetary incentives in the form of a constant discount in the household consumer’s electricity bill (with no connection to consumption levels) influence consumers participating in a demand management arrangement with their electricity provider (here the IEC) and if such an incentive will lead to a decrease in the participants’ electricity consumption and/or a shift in their consumption from peak to low demand hours. The study examined also the monetary incentive’s influence on the participants’ willingness to join a future arrangement. The findings show that the participants who received a constant incentive increased their consumption, contrary to the expected behaviour, suggesting the presence of a “rebound effect”. One of the incentives that predicted a tendency to save electricity was the pro environmental attitude of the consumer, whereas financial incentives did not predict a tendency to save electricity. Damage to consumer comfort caused by load shedding exerted no significant influence. The economic incentive of a discount in the electricity bill increased the consumers’ willingness to join a future arrangement, even at the cost of compromising their privacy, although the possibility that this arrangement would lead to the loss of their control of home electric appliances as a result of load shedding drastically decreased this willingness. A positive financial incentive was found to have a minor influence on consumers’ willingness to participate in a demand management arrangement, while a negative incentive (the wish to avoid fines) was found to be very influential. Comparing to previous studies, the results are mixed, confirming some previous findings and contradicting others – and they offer an important contribution for the worldwide debate on energy conservation and household electricity reduction, through the Israeli dimension in a complex puzzle. |
topic |
electricity demand demand-side management smart grid rebound effect monetary incentive consumer behaviour household electricity consumption m21 m38 q40 h41 |
url |
https://doi.org/10.1515/rebs-2018-0068 |
work_keys_str_mv |
AT elbazshimon effectofmonetaryincentivesonthedemandforelectricityofdomesticconsumerscaseofisrael AT zaitadriana effectofmonetaryincentivesonthedemandforelectricityofdomesticconsumerscaseofisrael |
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