Globally, we witnessed July 2023 as the hottest month in recorded history. With heatwaves and soaring temperatures, climate change-induced global heating will have important consequences for humans - and our energy systems.
The impetus to fight climate change has been squarely, and rightly so, on governments and multilateral to drive climate change action. However, is there a case for consumers to play a more direct role?
We propose the need for a new coordination framework to achieve climate-positive outcomes that explicitly tie up incentives for both consumers and energy companies. One such outcome is to achieve higher energy efficiency for the electricity grid. How? A new demand side, consumer-focused energy saving and emission reduction paradigm.
Solving the energy efficiency coordination problem
Despite the rapid global addition of renewables, our energy systems contribute more than three-quarters toward global emissions. Much of it has to do with hard realities – laws of nature and limitations of present-day energy storage technology. Despite the increase in installed renewables-based generation capacity, we cannot access solar power during night time (non-solar hours).
With rising temperatures in summer, there is an emergent night-time summer power demand peak - driven by ACs and other cooling appliances. This peak demand hits roughly between 10 pm to 1 am. For non-solar hours, power distribution utilities or DISCOMs purchase expensive power from fossil fuel-based power plants, but no one tells us that, in carbon terms, this implies higher emissions per unit of electricity consumed.
In the present state of the world, the individual and the institution (DISCOMs) seemingly coordinate for higher emissions. This needs to change.
On 7th August, India consumed 234 gigawatts of electricity. Growing cooling needs will soon push this demand further up. Supply may not be able to catch up, and adopting energy efficiency is a need of the hour. The approach rests upon a two-pronged focus. We will need to increase i) the adoption of energy-efficient appliances and ii) optimise present-day energy consumption.
Converging supply and demand
As per IPCC’s 6th Assessment Report, human behaviour-based interventions could play a crucial role in global climate change action. The IEA predicts that behavioural changes have the potential to reduce global CO2 emissions by 2 billion tonnes by 2030. Such measures are fairly well-known– switching to higher energy efficiency in clean cooking, EVs, use of public transport or even energy-efficient ACs and fans.
Let’s take the case of ACs. the sales and number of installed 3-star ACs is much higher than 5-star ACs. This is despite the fact that today, the price differential between a 3-star and a 5-star AC can be as low as Rs 5,000. A good 5-star AC also has cost recovery through the amount you save on the electricity bill. The International Energy Agency (IEA) projects that the number of ACs in India will go from 48 million units in 2020 to more than a billion in 2050. This is only for ACs- other appliances will contribute to this load, too. What will help make higher energy efficiency a default consumer choice? The answer is in designing incentives, both monetary and non-monetary that focus on consumer behaviour change - which also benefit the grid at large to reduce emissions.
Individuals learn from what others do. Several energy studies show that individuals are more likely to engage in pro-environmental behaviours when they think that is the norm. A study with a major power utility company in North America found that informing consumers of the energy consumption of others led to a reduction in average consumption by 2 per cent and savings in millions. People learn from others' energy efficiency behaviour.
Similarly, real-time feedback interventions on households’ energy consumption could be useful in rationalising their energy usage. A recent report by the World Resources Institute, India, which tests energy reports, supports the case for such low-cost information-based interventions. Tracking and learning about your energy usage, which is also beneficial for the environment, should be no different than tracking your daily step count!
Another programme would be, similar to the LED replacement programme, households will be given financial incentives to switch from a 3-star AC to a 5-star AC. Such incentives can range from providing ‘carbon tokens’ that can be redeemed on the purchase of other energy-efficient products. Countless other such interventions can be designed and tested.
Scaling up using technology
The missing link to solve our earlier individual and institutional coordination failure is pretty obvious (to us): technology. Consumer-level technology interfaces can help drive consumer behavioural change for the adoption of energy efficiency.
According to a 2021 USAID study of Delhi consumers, 80% of study participants were willing to reduce energy consumption to protect the environment and use energy efficient appliances; 77% of consumers were interested in energy efficiency to reduce their electricity bill. With an increased load of cooling and EV charging around the corner, the grid will need to be ready to witness multiple peak hours. Technology interfaces that help the consumers and grid communication is a first step. Coordinating to reduce emissions using behavioural interventions is a close second.
It’s time for the supply-side and DISCOMs, to catch up. For example, if consumers are incentivised to adjust their night-time AC usage based on solar or non-solar hours, it would avoid non-solar hours peaks for DISCOMs and reduce bills for the consumers.
As a consumer, imagine having the ability to track energy usage (and emissions) from your smartphone and receiving fungible incentives to reduce your load during peak hours to reduce grid-level emissions. Coupled with today’s energy savings, the emission savings unlocking will be a win-win for all accounts.
Both players coordinate for the environment. When driven at a scale, such initiatives imply savings of both - cost and emissions.
If the endgame is to reduce carbon emissions, a clearing house mechanism to align incentives for people and the planet is a need of the hour.
Authors: Saurabh Kumar is the Vice President-India, GEAPP, while Saksham Singh is a Behaviour Scientist. The views expressed are personal.
