Appendix B - Project description – INCAP:
Inducing consumer adoption of automated response technology for varying power
Tariffs
1. Summary,
Households can help counteract variation in power demand and supply by adopting „smart‟
technology for their appliances that automatically react to hourly wholesale market conditions
by disengaging them during high-priced periods. In the future, many household appliances
may have automated response technologies built in, however, transaction costs (e.g. because
of imperfect information and disutility of effort) can cause consumers to lag in adopting these
technologies. This can seriously inhibit the use of dynamic pricing and automated response
technologies even when this is economically advantageous to the consumer. Such adoption
barriers seem important for the reluctance of consumers to undertake economically favorable
energy saving investments and habit changes. The question analyzed in INCAP is: Can
consumers be induced to adopt varying tariffs and automatic response technology for common
household appliances at costs that make this socially attractive? The project implements a
large scale field experiment using an automatic response application for a common appliance
(e.g. refrigerators). This is a novel approach allowing estimation of the distribution of adoption
barriers across a large representative sample of power consumers in their natural consumption
setting based on controlled variations in the application technology and intervention design.
Results can point to those consumer groups where focused policies will be cost-effective and to
how these policies should be designed. The representative field experimental method gives us
a unique possibility for extrapolating results to general behavior patterns. We exploit this by
integrating results into macro models with which we will design policy strategies for inducing
household supply of regulating power and evaluating their consequences.
2. Objective of the project
The scientific objective of INCAP is
- to establish a blueprint of quantitative measures of consumer motives and barriers
regarding their adoption of varying tariffs and automated supply of regulating power
from appliances,
- to investigate important dimensions of behavioral heterogeneity, based on a sound field
experimental methodology and a large representative sample of Danish power
consumers, and
- to utilize results for designing policy strategies and investigating the consequences of
these policies using macro models of the Danish energy system.
For society/business our objective is to provide sound guidance to national policy makers and
private energy system operators about
- how to design effective policies for inducing different types of consumers to supply
regulating power, and
- the costs and benefits of implementing effective policies taking account of
heterogeneity across types of consumers.
3. The main results of the project
The core scientific results from the project will be evidence from a representative sample of
power consumers on
- motives and barriers affecting adoption of varying tariffs and automated technology for
different types of consumers
- the effectiveness of different policies for inducing different types of consumers to adopt
varying tariffs and automated technology
-
how this affects the resulting supply of regulating power from different types of
consumers
- the persistence of these effects
The core applied results from the project will be:
- the design of policies for inducing consumers to supply regulating power
- estimates of costs and effects of implementation of such policies at the national level
The project will produce
- about 20 journal papers (several should be publishable in top journals) and a similar
number of conference presentations, popular dissemination through contributions to
popular science journals and presentations in applied fora,
- Supervision and completion of 3 Phd‟s and contribute to training of 7 Post Docs,.
4. Background and hypothesis of the project
Private consumers can supply so-called „regulating power‟ if they are induced to adjust
demand to variable supply through tariffs that vary with real-time system conditions.1 Both
Danish and international studies (Faruqui and Sergei, 2010) find substantially larger demand
reductions from consumers with smart technology. However, all of the results surveyed by
Faruqui and Sergei are based on demand reductions in response to day-ahead dynamic prices.
None of the studies look at the impact of technologies that respond to real-time system
conditions. The present study will be the first to look at the impact of automated response at
the household-level to real-time system conditions.
A number of recent/ongoing DSR and EU-projects address this challenge (FlexPower, iPower,
and ECOGRID). All three projects develop technology for automated consumer response to
varying tariffs and system level control under plausible future power market conditions. iPower
focuses on innovation of this technology and will also produce knowledge of consumer
preferences around this interface. Thus prior and ongoing other research gives a general
knowledge of consumer preferences and develops „consumer friendly‟ technologies. In addition
field trials in these projects tell us how regulating power supply is affected when smart
technology is installed in Danish households that have volunteered for this. Results from this
prior research suggest that if consumers adopt „smart technology‟ for controlling common
household appliances this can generate a sizable supply of regulating power.
INCAP extends this knowledge in three important ways. First, we will provide a blueprint of
barriers and motives that determine to what extent a representative sample of Danish
consumers in their natural consumption setting actually will adopt and use variable tariffs and
„‟smart technology‟‟. Second, we do this in a large field experiment allowing us to investigate
the (presumably substantial) heterogeneity in consumer reactions to policy interventions and
what differences in barriers and motives drives this. Finally, we will exploit these results to
investigate what policy interventions can actually induce Danish consumers to allow common
household appliances to be controlled by „smart technology‟ and evaluate their social costs
and benefits using existing macro models of the Danish power market.
In order to measure the effect of interventions on power consumption we need to have access
to data from advanced power meters that register and electronically transmit hour by hour
power consumption to the power supplier (starting one year before the intervention until one
year after the intervention). Advanced power meters in combined with register data from
To avoid power system blackout, supply and demand of power must balance. Increased
amounts of fluctuating renewable production require increased amounts of dispatchable
“regulating power” to counteract these fluctuations.
1
Statistics Denmark makes Denmark uniquely well suited for such a study. This enables us to
stratify random selecting of intervention and control groups from the total population in the
test area without any other contact during the experiment than the actual intervention. We use
SYD ENERGI‟s supply area which is a unique test platform, where advanced meters have been
installed in all 256.000 private dwellings. This allows us to run a field experiment (Harrison and
List, 2004, Levitt and List, 2009) with unique possibilities for modeling and controlling for selfselection. We will merge metering data with register data using the BBR identifier (Gleerup et
al. 2010, Jensen et al. 2011). This provides us with uniquely detailed background for
stratification on data on consumers and their dwellings for matching of intervention and control
groups. Finally this allows us to model the adoption decision and to control for this selfselection when estimating treatment effects.
Recent international studies (see Wolak, 2006, and 2010) have used field experiments to
investigate consumers‟ responsiveness to varying tariffs with day ahead warning of price
changes finding encouraging results. However, to our knowledge there are no prior or ongoing
studies of consumer reactions with short warnings nor of their willingness to adopt and live
with such „smart technologies‟. Such technologies will increasingly become a built in facility in
common household appliances and so understanding consumer reactions in such a situation is
important. Investigating this is the purpose of the project.
From international studies, we know that consumers in a wide range of areas fail to undertake
what appear to be economically advantageous investments in energy efficiency (e.g. Granade
et al., 2009). The time and effort needed for information gathering, purchasing, installing, and
changing habits in connection with such investments, i.e. transaction costs, have been
suggested as important reasons for this (Mills and Schleich, 2010, Di Maria et al. 2008, Jaffe
and Stavins, 1994). Further, recent behavioral research has documented that even relatively
small short-term costs can cause consumers to delay investments even though they realize
that they have substantial long term benefits. It has been suggested that such procrastination
effects may also be important in explaining energy savings investment behavior (Allcott and
Mullainathan, 2010). Finally, non-pecuniary (green, altruistic, political consumer) motives are
important in other markets and may also be so here. The multiple motives/barriers suggested
in the literature make substantial heterogeneity in the behavior and in the underlying
explanations across the population of power consumers likely (depending on for example
education, family situation, etc.).2 At the current state of the art there is a call for sound
empirical research in consumer‟s energy investment behavior that takes behavioral
explanations into account (Allcott and Mullainathan, 2010) and avoids the self selection issues
that characterize most prior studies (Pratt et al., 2010). Sound experimental evidence on the
distribution and relative importance of these potential explanations across power consumers
would be a valuable contribution to the scientific literature. This is the object of our study.
5. Innovative value, impact and relevance of the project.
For science: The suggested study of consumer adoption of variable tariffs and automated
response technology is novel. Our use of the field experimental design based on a large
sample promises sound empirical results on the importance of different transaction costs and
behavioral explanations of consumers‟ adoption behavior as well as allowing us also to
investigate heterogeneity of these effects. This answers current calls for research in the
literature and should be publishable in top journals (Energy Journal, JEEM, IEEE Transactions
In fact a recent experimental study of small power saving investments and habit changes
(Jensen et al., 2011) finds substantial behavioral heterogeneity among Danish power
consumers.
2
on Power Systems and general economics journals). Particularly our investigation of crowding
out effects between pecuniary and non-pecuniary motives for adoption could be a contribution.
Investigation of such effects in a standard consumer market as power consumption the way we
suggest is novel.
For society/business: Danish climate/energy plans call for fossil free energy production by
2050 and a 33% reduction by 2020. The Danish power supply system must integrate
substantial increases in volatile wind power supply and new types of demand (e.g. from
electric cars). In the future many common household appliances will have automated response
technology built in. The results of the project will point to consumer groups where focused
implementation policies can be cost-effective in inducing consumers to use these facilities and
to how these policies should be designed. This is relevant for power companies facing this
problem. Further we will design alternative national implementation strategies for household
supply of regulating power and evaluate their welfare economic consequences and effects for
power system stability. This should be relevant for national and EU level policymakers. Finally,
there may be a technological impact of INCAP. Develco Products believes that their role in
developing the „smart application‟ will strengthen their current position as a market leader
within ZigBee technology.
6. Project’s methodology and results
The project combines technical and social sciences and uses randomized controlled trials (RCT)
in the context of a field experiment (Harrison and List, 2004) among SYD ENERGI‟s power
consumers.
Theoretical foundation
Our main goal is to understanding consumer behavior and determinants around consumer‟s
choice of pricing scheme, adoption of automated response technology and the implications for
consumer reactions to variable pricing signals during the following year. The theoretical
foundation for this will be behavioral economics. This discipline integrates insights and results
from psychology and behavioral sociology into well structured (formal) models in the classical
micro economic tradition capturing well established behavioral phenomena like procrastination,
prosocial behavior and the importance of personal habits (O‟Donoghue and Rabin, 1999,
Benabou and Tirole 2004, 2006). The explicit and formal model structure of this foundation is
critical for guiding the experimental design so that we can identify key parameters through
RCTs and interpret them clearly (see e.g. Wolak (2011), Fosgaard et al (2011) and Jensen et
al (2011) for examples of this from project participants). The theoretical foundation for the
simulation of welfare effects of national policy strategies is macroeconomics.
The field experimental method
We use pilot studies to focus the experimental interventions on behavioural dimensions that
appear to be especially important for the adoption decision, we are studying. For example an
intervention could be used to investigate how shifts in peak load demand can be induced by
providing marginal incentives through variable tariffs. A random sample of consumers from the
subject pool is presented with the option of switching to a variable tariff using the automated
application telling us which types of consumers are willing to switch under these specific
conditions. If we introduce variation in how attractive the offers are (e.g. half get a more
attractive offer and half a less attractive offer) then the intervention will also tell us how
responsive different types of consumers are to this type of incentive. The demand response for
consumers that do switch tariff system is found by comparing power consumption with control
groups on fixed tariffs. Introducing variation in complexity or control options of the automated
response technology will tell us how this affects the probability of adoption and the demand
response for different types of consumers.
We investigate the potential of affecting behavior through non-pecuniary (environmental, civic
duty or moral commitment) motives and whether pecuniary rewards crowd out non-pecuniary
motives.3 Since we will follow our subject a year after the intervention we will also be able to
investigate persistence of such effects. It may for example be that such non-pecuniary motives
are important at the time of intervention but are less persistent compared to pecuniary
motives. We also investigate the effects of „tariff structure complexity‟. Studies find that
misperception of simple incentive schemes can be substantial and that reciprocal behavior
based on moral commitment rather than incentives is common (Fosgaard et al, 2011). If pilot
studies find such effect important a starting point for investigating this could be an
intervention offering consumers a fixed rebate on the fixed tariff in exchange for installing the
application and committing to react to peak load situations when possible.
Data quality
The field setting of the experiment is a major advantage of INCAP since we (in principal) will
be testing actual policy interventions among consumers in their natural environment and so we
(to a substantial extent) avoid the critical problem of having to derive „natural‟ behavior and
policy effects from results obtained in an „unnatural‟ laboratory setting. In addition, the fact
that the experiment subject pool is drawn from the entire population of energy consumers in
SYD ENERGI‟s area decisively strengthens our results external validity. A second advantage is
the experiment‟s scale. Because of this we can ensure a sufficient number of subjects in any
given intervention to e.g. vary incentives across consumers and to identify heterogeneous
responses across different consumer types (e.g. based on socio-demographics and power
consumption patterns) with the necessary statistical power.4 A third advantage is our access to
detailed register data from statistics Denmark prior to randomization in the experiment. This
makes it possible for us to model the adoption decision and to optimize sample representation
according to the motives/barriers that we are interested in. A fourth advantage is the unique
opportunity for identifying key behavioral parameters associated with adoption and use of
automated response technology since we can introduce controlled randomized variation in
different dimensions of this technology (e.g. interaction complexity, feedback, control options).
This also gives us the unique possibility of being able to measure detailed information of how
households use the technology.
Work packages
The project is organized in six work packages. The first WP is develops the „smart‟ application
that will be used in the experiment. The core methodology here is „engineering science‟, but
consumer focus groups and tests will use qualitative sociological methods. The next three WPs
develop the experimental design, run the field experiment using the „smart‟ application and
analyze the collected data. The main disciplines in all three WPs are micro econometrics and
microeconomics (including behavioral and experimental economics). The fifth WP uses results
A number of recent studies find this in other areas of behavior (Tonin and Vlassopoulos 2010,
Georgellis et al 2011) suggesting that this could also be the case for power consumption.
3
4
Power calculations done in advance of the experiment are very important for optimizing
subject allocation between treatments so as to get precise estimates of treatment effects. We
will do this systematically.
from the experiment firstly design and evaluate economy-wide effects of smart technology
implementation policies using macroeconomics and CGE models, secondly improve existing
models for the grid impact of automated demand response using engineering science.
WP1: Developing a user-installable, "smart" household unit for adding demand response
capabilities to ordinary refrigerators (WP-leader: Senior Scientist Henrik Bindner, Risø DTU).
The goal of this WP is the design, development, production and provision of deployment
support for the hardware unit used in the field experiment. The unit must be easy for
consumers to install and must feature a remote-configurable local user interface to allow
consumers to interact with the unit. The design of the user interface(s) will draw on research
activities in WP6 of the ongoing iPower project. User friendliness will be tested using focus
groups. The unit must include a software and communication solution which allows remote
monitoring, data collection and the distribution of price signals to a larger number of these
units. The concept for this solution will be developed together with WP3, its implementation is
part of WP1. After successful tests of the finished unit, the participants of WP1 will continue to
provide technical support for the field tests in WP3.
WP2: Identify consumer motives and barriers and develop the experimental design. (WPleader Professor Eirik Amundsen, FOI-KU). Based on prior theoretical empirical studies (e.g.
Wolak, 2006 and 2010, Brutscher, 2010, e.g. Barbose et al., 2004, Alcott 2009, Costa and
Kahn, 2010, Ferraro and Price 2009) and ongoing qualitative studies in iPpower a conceptual
model for understanding consumers‟ motives and barriers is developed and adjusted based on
in-depth interviews and a survey of power consumers. Based on this we will develop the
specific field experimental design. Coordinating with the consumer surveys planned in
IPOWERs WP6, a preliminary analysis of the distribution of barriers and motives and their
relative strength is performed using the “stated preference” survey technique. The data should
provide a valid picture of the distribution of relevant motives/barriers over power-consuming
households. Based on this we will conduct pilot tests of the experimental interventions.
WP3: Running the Field experiment (WP-leader: Adjunct associate professor Anders Larsen,
FOI-KU). The subject pool for the experiment is selected using Statistics Denmark register
data and the predictor model developed in WP2. Subjects are randomly allocated to
intervention and control groups within each strata. For all households in the pool of subjects
SYD ENERGI will give us access to metered consumption data from one year before to one
year after the intervention. Households will be contacted by SYD ENERGI with offers of
dynamic pricing tariffs and having the smart application developed in WP1 delivered. The
specifics of these offers developed in WP2 will vary between intervention groups and values of
key parameters will vary across households within a given group. All contact with consumers
will be through SYD ENERGI. Due to limitations in the existing metering infrastructure, a
separate communication infrastructure is needed for the distribution of price signals and the
collection of high-resolution experimental data. The concept for this infrastructure will be
developed in WP3 together with WP1.
WP4: Estimating motives, barriers, policy and price effects (WP-leader, Professor Lars Gårn
Hansen, FOI-KU). Power consumption data from WP3 are merged with Statistics Denmark
register data (see for example Jensen et al., 2011). Based on initial analyses a stratified
sample of households is selected for post experimental interviews (Cochran, 1977). After
merging, heterogeneous treatment effects are estimated (Imbens, 2004). One focus of our
estimation will be to track the evolution of effects over time in order to get a sound picture not
only of initial effects but also of their persistence. Another focus is the identification of non-
linear effects of treatment scale (e.g. is there a minimum size of tariff differences before
consumers respond?).
WP5: Design and evaluation of National strategies for the adoption of “smart” technologies and
increasing demand flexibility. (WP-leader: Professor Poul Erik Morthorst, Risø.DTU). Using
results from WP4 national strategies for the deployment of smart technologies for increasing
demand flexibility are developed, and the need for additional incentives to increase demand
flexibility is analyzed using partial equilibrium modeling. Policy instruments addressing specific
barriers and types of households are analyzed and combinations of instruments for obtaining
specific levels of demand flexibility are evaluated. The costs of initiatives are evaluated against
savings in the need for traditional regulation capacity. Building on models and simulation tools
developed in the FlexPower project, the work package will also conduct analysis and modeling
of the effective potential for power grid services available from the participating households.
Statistical models for the grid impact of demand response exist, but INCAP will extend the
tools and refine/validate the models against high-resolution data collected during the field
experiment.
7. Project plan
WP1, WP2 and WP3 (experimental preparation tasks) will start when the project is initiated
and run in parallel: with WP1 delivering input on possible technology variations in the
experiment. When WP1 and WP2 have been completed the actual field experiments (tasks 3.5
and 3.6 in WP3) will be run. As soon as usable data become available from WP3, WP4 starts
developing empirical models for estimation and testing these on real data. When the field
experiment is completed and the complete result data set ready – data analyses and model
estimations will start in WP4. When preliminary estimation results based on test data can be
produced by WP4 these will be delivered to WP5 allowing work on policy design simulation and
modeling of grid impact to proceed. Finally WP5 policy simulations based on final results will
conclude the analytical work of the project. All through this process and some time after
completion of the final policy analysis results will be disseminated to the scientific community
and more generally (WP6).
Below WP goals and subtasks are presented. Finally a time line of subtasks and milestones is
shown in the Gantt diagram followed by a list of milestones.
WP1: (WP-leader: Senior Scientist Henrik Bindner, IES-Risø.DTU).
Participants: IES Risø-DTU, Develco Products
Goals: Develop, validate the functionality and support the deployment of the experiment‟s
technical component. Quantify and model the aggregated response.
Tasks:
1.1: Hardware specification
1.2: User interface specification
1.3: Communication and data aggregation
1.4: Prototype development and functional testing
1.5: Usability test and evaluation
WP2: (WP-leader Professor Eirik Amundsen, FOI-KU).
Participants: FOI-KU, Frank Wolak
Goal: to develop the experimental design and sample stratifications to be used in the field
experiment.
Tasks:
2.1:
2.2:
2.3:
2.4:
2.5:
2.6:
2.7:
Develop a conceptual model of consumer behavior
Initial survey of consumer barriers and motives
Merging pilot survey data with statistics Denmark register data
Estimating the predictor model
Developing Intervention designs and group selection procedures.
Pilot test of Interventions and selection procedures
Publish results based on initial surveys
WP3: (WP-leader: Adjunct associate professor Anders Larsen, FOI-KU).
Participants: FOI-KU, SYD ENERGI, IES Risø-DTU, Develco Products
Goal: to develop the infrastructure, run the field experiment and collect data
Tasks:
3.1: Develop variable price billing infrastructure
3.2: Develop a communication infrastructure for price signal distribution
3.3: Develop a communication infrastructure for collection of experimental data
3.4: Selection of intervention groups based on DS-register data stratification.
3.5: Running of interventions – small field test
3.6: Running of interventions – large field test
3.7: Collecting and continual quality checking of data
WP4: (WP-leader, Professor Lars Gårn Hansen, FOI-KU).
Participants: FOI-KU, Frank Wolak
Goal: to analyze the result data from the experiment and report these results
Tasks:
4.1: Merging of experimental data from WP3 with DS-register data
4.2: Develop estimation models based on preliminary data
4.3: Undertake effect estimations on final dataset
4.4: Develop models for extrapolation of results and generate input data for WP5
4.5: Publish results based on the experimental data
WP5:. (WP-leader: Professor Poul Erik Morthorst, ESA-Risø.DTU).
Participants: ESY, IES
Goal: to design/evaluate new national strategies for adapting smart technologies based on
cost-effective policy instruments based on results from WP4.
Tasks:
5.1: Identifying policy instruments for specific levels of demand flexibility
5.2: cost-effectiveness analysis of incentives for flexibility using CGE modeling
5.3: Analyzing the cost of flexibility vs. traditional regulation
5.4: Analysis and modeling of grid impact
5.5: Designing new national strategies for the deployment of smart technologies
WP6: (WP-leader: Associate Professor Carsten Lynge Jensen)
Participants: FOI-KU
Goal: Dissemination and administration
Tasks:
6.1: Organize meetings and seminars
6.2: Follow up on budgets
6.3: Follow up on research and publication plans
6.4: Reporting and administration
Gantt Diagram INCAP project
Work packages
Wp1 developing applications
1.1 Hardware specification
1.2 User interface specification
1.3 Communication specification
1.4 Prototype development and test
1.5 Usability test
Wp2 designing experiment
2.1: Develop a conceptual model of consumer behavior
2.2: Survey of consumer barriers and motives
2.3: Merging pilot survey data with DST register data
2.4: Estimating the predictor model
2.5: Develop intervention designs and group selection
procedures
2.6: Pilot test of interventions and selection procedures
2.7: Publish results based on initial surveys
Wp3 running field experiment
3.1: Develop variable price billing infrastructure
3.2 Price signal distribution infrastr.
3.3 Data collection infrastr.
3.4: Selection of intervention groups based on stratified
DST-register data
3.5: Run interventions – small field test
3.6: Run interventions – large field test
3.7: Collect and quality check of data
Wp4 Estimating results
4.1: Merge of experimental data (WP3) and DST register
data
4.2: Develop estimation models based on preliminary
data
4.3: Undertake effect estimations on final dataset
4.4: Develop models for extrapolation of results and
generate input data for WP5
4.5: Publish results based on the experimental data
Wp5 National strategies
5.1 Identifying policy instruments
5.2 Cost-effectiveness of new incentives
5.3 Cost of flexibility vs. traditional regulation
5.4 Modeling of grid impact
5.5 Designing new national strategies
Wp6 Dissemination and administration
6.1: Organize meetings and seminars
6.2: Follow up on budgets
6.3: Follow up on research and publication plans
6.4: Reporting and administration
2012
2013
2014
2015
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
List of milestones
No. and name of milestone
1a Lab-tested prototype unit
1b Unit ready for field test
2a complete Conceptual model
2b Complete design for variable price/barriers
2c Complete SP survey
3a Obtained data from small experiment
3b Obtained data from large experiment
4a Complete empirical estimation
4b publish results
5a Cost effectiveness of demand flexibility
5b Cost of flexibility vs. traditional regulation
5c National strategies for deployment of smart
technologies
5 d Work shop on strategies for deployment of
smart technologies
5e Simulation model for grid impact
Deadline
Q1 2013
Q3 2013
Q4 2014
Q1 2013
Q1 2013
Q4 2013
Q2 2014
Q3 2014
Q2 2015
Q4 2013
Q4 2014
Q4 2015
Type
Prototype
Hardware unit
Article
Article
Articles
Data
Data
Article
Articles
Article
Article
Article
Q2 2015
Work shop
Q2 2015
Article
8. Project’s international dimension
An important part of INCAP‟s international dimension and a major attraction of INCAP is the
collaboration with the US Program on Energy and Sustainable Development (PESD) directed by
Professor Frank Wolak. This collaboration will bring cutting edge experience from a research
leader in the field into the Danish research environment. We plan to coordinate with and draw
on field experiments currently being done by PEDS with California power consumers. This
collaboration will also offer the projects PhDs and Post Docs unique opportunities for exchange,
guidance and collaboration. The scientific potential of the proposed project and the
collaboration with Frank Wolak makes us confident that we will be able to staff the scientific
advisory board with highly qualified international researchers further extending these
advantages and collaboration possibilities for the Danish research environment.
For the technical development in INCAP collaboration with Pacific Northwest
National Lab in the US (PNNL) is planned strengthening the existing collaboration with Danish
researchers at Risø-DTU. This development will also help Develco Products keep and extend
their position as market leaders within ZigBee technology and with this their international
marketing potential.
9. Legal and ethical aspects, etc.
Merging of Statistics Denmark register data with power consumption data requires permission
from the Danish register data authority. The main requirement for this is that merging is done
by DS that the data is anonymized and that data only are accessed by authorized researchers
through the DS-server. This procedure presents no problem for our data analysis and FOIs
researchers have the necessary authorization and extensive experience working with data on
the DS-server. No other legal or ethical aspects are foreseen.
10. Publication and promotional strategy and exploitation of results
Theoretical and empirical research results from WP 1-5 will be presented at relevant
conferences (AEA, EEA, IAEE, AERE and EAERE, IEEE PES conferences) and published in
international peer reviewed journals (Energy Journal, JEEM, IEEE transactions and general
economics journals). Relevant results will be translated into popular texts disseminated
through Danish popular journals (e.g. El & Energi) and media. Additionally, dissemination of
the project results will include a one day seminar in which relevant actors from public and
private organizations will be invited. We will also establish a public homepage describing the
project and presenting methods, models and results developed.
11. The participating parties and project management
The Project partners
The 6 full partners in INCAP are:
- FOI-KU: Institute of Food and Resource Economics, University of Copenhagen
- IES-Risø DTU: Intelligent Energy Systems, Risø DTU
- ESA-Risø DTU: Energy Systems Analysis Division, Risø DTU,
- Professor Frank Wolak, Stanford University
- SYD ENERGI
- Develco Products
FOI-KU: Institute of Food and Resource Economics, University of Copenhagen
FOI_KU has a multidisciplinary group of researchers (about 25 staff and PhDs) studying
consumer behavior spanning both economist and sociologist using quantitative, qualitative and
experimental methods. FOI houses the national center for panel data from GfK-consumer
tracking Scandinavia and the consumer research group has a long tradition for demand
estimation, effect evaluation and willingness to pay studies using micro level cross-section and
panel data including DS-register data. Over the last 5 years economic experiments using
laboratory, internet and field settings have become an important investigation method
including experimental studies of electricity consumption.
FOI-KU will lead the project and lead and staff the work packages developing,
running and analyzing data from the field experiment (WP2-4). FOIs administration has
extensive experience managing larger research projects. FOIs participants in INCAP include:
- Project
leader professor Peder Andersen
who has
extensive leadership
experience,leader of WP2 (developing the experimental design) and participant in WP
4 Professor Eirik S. Amundsen who is internationally recognized for his researcher in
electricity markets,
- leader of WP3 (running field experiment) Associate Professor Anders Larsen who has
invaluable experience from having managed the FEEDBACK-project (a large field
experiment about SMS feedback on power consumption in SYD ENERGI‟s area)
- leader of WP4 (estimating results) Professor Lars Gårn Hansen who has an extensive
research record in regulation and behavior including experimental economics.
IES-Risø DTU: Intelligent Energy Systems, Risø DTU
The Intelligent Energy Systems Programme at Risø DTU was formed two years ago as an
interdisciplinary research group, joining researchers in the fields of smart grid technology,
integration of distributed and renewable energy sources, energy market modeling and
electromobility. The group currently consists of about 20 researchers and PhD students. IES
develops and runs the SYSLAB experimental facility and maintains the Wilmar and IPSYS
simulation models. IES is also the Danish node of the DERLAB European Network of
Excellence. Through the origins of its research in other Risø departments, IES has inherited
significant experience with participation and lead of national and international research
projects. Current projects include, among others: iPower (Platform lead), EU DERRi (Danish
node), FlexPower, EDISON, TWENTIES.
IES will lead and staff work package 1, developing the technology used in the field
experiment. Furthermore, IES will contribute to the development of the communication
concept in WP3. It will also provide the electro technical component of the evaluation work in
WP5, building on the work in the FlexPower project.
ESA-Risø-DTU: Energy Systems Analysis Division, Risø-DTU:
Energy system modeling has been a main competence at ESA-Risø-DTU for more than 25
years and the current focus is the Balmorel and Wilmar models, which are developed and used
in a number of international studies/projects such as the All Island Grid Study, the European
Wind Integration Study EWIS and a large number of EU-funded projects including Anemos
Plus, SUPWIND, Tradewind, Improgress and Solid-der. Analyses of marked design, policy
regulation and long-term scenarios, especially in relation to integration of renewable
technologies, have been a topic for many years. Professor Poul Erik Morthorst and other staff
members of Energy Systems Analysis, Risø DTU, have worked on numerous Danish and EUfunded research projects related to markets and policy regulation, e.g. the EU-funded projects
OPtres and FUTURES and the DSF CEESA-project. Head of Unit Frits Møller Andersen has been
the leader of the development and maintenance of the Emma-model for more than 15 years.
ESA will lead and staff work package 5, undertaking modeling of aggregated level
energy demand, energy systems, analysis of market design, policy regulation and the
development of policy scenarios.
Professor Frank Wolak, Stanford University
is the Holbrook Working Professor of Commodity Price Studies in the Department of Economics
at Stanford University. He is Director of the Program on Energy and Sustainable Development
(PESD) in the Freeman-Spogli Institute (FSI) at Stanford University.
Frank Wolak‟s fields of specialization are Industrial Organization and Econometric
Theory. His recent research focuses on energy and environmental market design. One focus of
his research has been consumer reactions to variable tariffs where he has run a number of
field experiments with power consumers published in top journals. He will participate in WP2
and WP4 where the field experiment is designed and the data analyzed.
SYD ENERGI
is an energy company with 256.000 customs (and 592 employees). SYD ENERGI is critical in
the running of the experiment (WP3) since experimental variations, price systems and
consumption data measurement is done through SYD ENERGI‟s registration and billing
systems. SYD ENERGI will contribute doing the needed adjustments in these systems to
accommodate the experiments price signals and data collection. The company will also
participate in developing the intervention infrastructure and intervention material.
SYD ENERGI has a long tradition of participating in research projects focusing
energy saving and developing/using technological interventions for influencing energy
consumption. Specifically SYD ENERGI has substantial experience cooperating with researchers
in field experiments such as e.g. the FEEDBACK-project, „Prisfølsomt elforbrug i husholdninger‟
and „ENERGIUDSIGTEN – prisfleksibel elforbrug‟.
Develco Products
Is a small high tech firm (9 employees) providing communication systems for AMR, AMI, and
Smart Metering combined with Home Automation for improved energy efficiency. Develco
Products is currently a market leader within ZigBee technology.
In this project, Develco Products will provide expertise and technology identifying
the potential for energy savings and optimization related to domestic appliances. The firm will
provide temperature sensors, on/off switches, and wireless gateways capable of connecting the
domestic appliances with the smart grid. The system will enable remote submetering of
appliances and control hereof.
Implementation of ZigBee Smart Energy devices is a high priority area for
Develco Products and the demonstration aspects of INCAP will be a valuable contribution to the
market penetration. Pilot projects at this high level will deliver pivotal information about
potential and efficiency of intelligent domestic appliances and user behaviour.
Project leadership and management
The project is lead by professor Peder Andersen (FOI-KU). Peder has 18 years of research
leadership experiences from positions as director of the Danish Economic Council and director
of the institute of economics, University of Copenhagen. In addition to his extensive
experience with project management and leadership Peder Andersen is also a highly qualified
micro economist and he will together with Professor Frank Wolak participate directly in WPs 2
and 4 where the experimental variations are designed and the data analyzed.
The project will be organized as shown in this model and described below:
The Project administrator/coordinator will together with the project leader follow-up on
research plans, budgets and the required reporting and popular dissemination. The day to day
project management is the responsibility of work package leaders. Meetings with the Strategic
Research Council, management of the projects overall economy and the overall management
in scientific progress of the project is placed at FOI. The administrative organization at FOI will
assist in controlling the project economy and practicalities like the organization of meetings
and seminars.
The International Scientific Advisory Group will include prominent international
researchers with relevant experience. The WP leaders (WPLs) are responsible for the
research carried out in the project according to milestones/budget. Together with the project
manager and the project administrator they constitute the Steering Group which meets 3-4
times per year. Prior to these meetings, WPLs deliver progress reports. Connected to these
meetings, meetings with the international scientific advisory group will be held once every
year. PhD students and supervisors will form a group that will meet quarterly to present
progress and discuss problems. The international experts who also act as co-supervisors will
attend PhD-meetings organized in connection with the annual seminars.
The National Dialogue Group (e.g. public authorities, power supply companies) will be
invited to discuss project plans and act as sparring partners and key informants. Go-home
meetings and a final seminar will be organized in collaboration with Energinet.dk and the
Danish Energy Association.
12. Key references
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Brutscher, P-B (2011) Payment Matters? - An Exploratory Study into Pre-Payment Electricity
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Cochran, W. G. (1977) Sampling Techniques, 3rd Edition, Wiley.
Costa, D.L. and M.E. Kahn (2010) Energy Conservation „Nudges‟ and Environmentalist Ideology:
Evidence from a Randomized Residential Electricity Field Experiment (2010) NBER Working Paper No.
15939
Di Maria, C; S. Ferreira and E.A Lazarova (2008) Shedding light on the light bulb puzzle: attitudes
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Fosgaard, T, L. G. Hansen and E. Wengström (2011) Framing and Misperceptions in a Public Good
Experiment, No 2011/11, FOI Working Paper from University of Copenhagen, Institute of Food and
Resource Economics
Gleerup, M., A. Larsen, S. Leth-Petersen and M. Togeby (2010): The Effect of Feedback by Text
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technology‟, Resource and Energy Economics 16, 91-122.
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of providing autopoweroff plugs to households - A field experiment. Institute of Food and Resource
Economics. FOI working paper.
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Compact Fluorescent Lamps. Resource and Energy Economics 32: 363–378.
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Taxes. American Economic Review (Papers and Proceedings) 93 (2), 186–191
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1849
Pratt, R.G, M.C.W. Kintner-Meyer, Balducci, TF Sanquist, G. Gerkensmeyer, K.P Schneider, S.
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Nortwest National Laboratory.
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