February 27, 2017

What if efficiency were "visible" to consumers?

Impact of the Enervee Score on TV selection

Written by
Anne Arquit Niederberger

Enervee’s market data show that efficiency does not always come with a higher price tag. So, what if we were able to make efficiency “visible” to consumers? Would they select more efficient products?

Our ongoing series of randomized controlled trials (RCTs) on the effectiveness of the Enervee Score offers some answers. Whether Republican or Democrat, general population or low-income, rushed or planned purchase context, clothes washers or TVs, in all experiments, we’ve found that the Enervee Score shifts preferences towards more efficient products — even without incentives.

The Enervee Score puts information on the relative energy efficiency of individual models — across a wide and growing range of lighting, appliances, electronics and heating & cooling equipment categories — at the fingertips of consumers. The Score is presented as a numerical rating on a zero to 100 scale, with 50 being the floor for new products currently offered for sale, and the most efficient products assigned scores near 100.

Enervee Score scale

The scores are updated daily, to reflect the actual choice set that is offered to consumers by retailers each day. As product offerings shift, the Enervee Scores automatically recalculate, so shoppers always know that a product that scores 100 is at the top of the pack.

The Enervee Score is integrated into publicly available, consumer-facing marketplaces.

Our most recent RCT looked at how people choose televisions. The nine 55” TV models from seven brands that participants could choose from in this experiment had a wide range of annual energy consumption values (69–203 kWh/year) and retail prices ($400 — $1,719)[1]. We analyzed annual energy consumption in the experiment, comparing choices made by participants assigned to treatments with the Energy Score present against those absent the score[2].

The presence of the Enervee Score resulted in a 12% more efficient first TV model choice (mean consumption of 95.7 kWh/y) than the treatments without the Score (108.3 kWh/y). And we found no significant difference in the mean retail price of the first choice between these groups[3]. This result is important, because it suggests that by making efficiency visible to shoppers with the Enervee Score, they are empowered to consider the energy dimension when making purchasing decisions.

It also underscores the potential for transparency to transform appliance markets.

At least for televisions, the presence of the Energy Score results in product choices that represent large potential electricity savings — achievable at no incremental cost and without financial incentives. The consumption level of the first choice when the Score was present was 22% lower than the average of all 9 product models and 17% less than the average of those models that were ENERGY STAR qualified[4] — while costing less at checkout (the mean retail price of the first choice was $849).

Comparison of electricity use
Comparison of electricity use of 1st model choice when Enervee Score is present against models included in experiment

These results are all the more important when considering that existing policies haven’t managed to slow the growth in electricity demand from the growing number of small electrical devices that people have in their homes. Energy standards and label schemes lag behind technological developments, leaving staggering, essentially zero cost savings opportunities on the table. And — although traditional product rebates may increase attention as long as they’re offered — they aren’t well suited to transform markets at scale, particularly when energy saving technologies don’t cost more and when savings are only large in the aggregate, but small per unit. Efficiency program administrators find it increasingly difficult to maintain the cost-effectiveness of financial incentive schemes for TVs and other consumer devices with small per unit savings.

Small energy bill savings per device are also unlikely to register with consumers. In expert circles, this is often attributed to cognitive overload and/or “rational inattention” (when information to determine savings is costly to acquire and potential energy savings are low, decision makers choose to act upon incomplete information, rather than incurring the cost to become perfectly informed).

Fortunately, the results presented above suggest that making efficiency visible (with the granular, daily updated Enervee Score) and injecting this information into the modern — increasingly digital — shopping journey can empower us to make energy smart purchasing decisions.

Notes:

[1] Best retail price on Enervee Marketplace (enervee.com), recorded 31 October 2016

[2] Levene’s Test of Homogeneity showed that the variances were not equal (F=5.14, p=.05); we therefore used the Welch 2-sample t-test to analyze the difference in annual energy consumption of the first choice (t=2.28, p=.05).

[3] There was also no statistically significant correlation between the retail price of the 9 TV models and their annual energy consumption.

[4] This does not include the lone 1080p resolution ENERGY STAR Most Efficient 2016 model, which uses 38% less energy than participants’ mean first choice when the Score is present.

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