Incentives to Shift - Megan R. Bailey

Show me the money! Incentives and nudges to shift electric vehicle charge timing

Summary

Bailey et al. (2023) performed a field experiment that aimed to evaluate how EV owners react to different stimuli in the decision of controlled charging.

There are two strategies in this study: financial incentives and moral suasion “nudges”. Financial incentives were proved to be effective, so that EV owners altered their charging behaviors to obtain financial feedback. However, moral suasion “nudges” were not so effective.

Another observation is that, once the financial incentives were removed, the EV owners went back to original charging habits, suggesting that the behavior change was not internalized and did not turn into habit. It was PURELY in response to the financial benefits.

The Field Experiment

There are 2 phases of the experiment.

In the 1st phase (Mar to Aug 2022), EV owners are divided into 3 groups:

  • Group 1 - the “Rewards” group (68 vehicles) that receives financial incentive of 3.5 cents per kWh (23% discount) for off-peak (10 PM to 6 AM) charging.
  • Group 2 - a “Nudge” group (45 vehicles) with only moral information.
  • Group 3 - a “Control” group (37 vehicles) with no intervention.

The 1st phase results are:

  • The “Rewards” group showed a significant change from 59% to 77%.
  • The “Nudge” group showed no difference between the “Control” group.
  • EV owners are far more responsive to price changes than typical household electricity users. A possible reason is that shifting household electricity usage will deal functionality problems, while shifting EV charging will not.

Figure 1. Share of kWhs Charged At Home in Off-Peak Hours (Phases 0 and 1)

The 2nd phase (Aug to Dec 2022) cancels the financial incentive of a random half of the “Rewards” group. The charge timing reverts back.

Figure 2. Share of kWhs Charged At Home in the Off-Peak - Phase 2 Analysis

The field experiment was performed in partnership with ENMAX Power. The significance of the results was calculated using one-way ANOVA test. The methodology utilized an MNL model.

Results

EV owners significantly adjust their charging behavior in response to financial incentives, but revert to original habits once incentives are removed, while moral suasion has no noticeable impact.

Gaps

  1. Sample amount too low: each group only has less than 100 samples, which is way too low in our usual statistical data collection standards.
  2. This experiment is limited only to early EV adopters, which is by itself a biased sample.
  3. This study only utilized static TOU (Time of Use) rates, suggesting the necessity of expanding to more dynamic pricing methods.

It will be better to have a larger and more varied user sample, with different financial incentives and electricity prices.

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References

Bailey, Megan R., David P. Brown, Blake C. Shaffer, and Frank A. Wolak. 2023. “Show Me the Money! Incentives and Nudges to Shift Electric Vehicle Charge Timing.” National Bureau of Economic Research, August. https://doi.org/10.3386/w31630.