Authors: Watson, N.E.; Huebner, G.M.; Fell, M.J.; and Shipworth, D
Published in: Energy Policy Volume 147, December 2020, 111891 https://doi.org/10.1016/j.enpol.2020.111891
Date Published: 3 October 2020
Abstract:
Usually consumers have a single energy supplier. Permitting consumers to take on additional contracts with local suppliers in a multiple-supplier model could support growth of local renewable energy. The aims of this study were to assess the attractiveness of a multiple-supplier model and to understand whether consumers would be more likely to engage with local energy suppliers in a multiple-supplier model or the current single supplier model. An additional aim was to explore the role of default effects and cognitive biases associated with remaining with incumbent suppliers (loss-aversion, cognitive effort and implied endorsement). Two nationally representative survey experiments were conducted in Great Britain (n = 1042, n = 762). Results showed that participants were significantly more likely to engage with local energy suppliers under a multiple-supplier model than the current single supplier model. In one experiment, consumers’ preference for adding a local supplier under a multiple-supplier model was so strong that it overcame default effects. The perception that the supplier has been recommended (i.e. implied endorsement) was the most robust mechanism associated with remaining with default suppliers, suggesting that explicit endorsement of local energy suppliers may encourage uptake. Results suggest multiple-supplier models are likely to be a promising avenue for increased energy market engagement.
Keywords: Local energy; Behavioural economics; Cognitive biases; Future energy markets; Survey experiment; Multiple-supplier models
Insights for EnergyREV:
We conducted two nationally representative survey experiments to assess the attractiveness of a multiple-supplier model, finding it to be both highly acceptable and more likely to encourage engagement with local energy suppliers than the current single supplier model. Results suggest that implied endorsement of local energy suppliers may encourage uptake, and that offering consumers multiple energy suppliers could support local energy growth.