Slashing the surplus

Abstract

Smart metering and home energy management systems (HEMS) support households with roof-top photovoltaic (PV) to optimize self-consumption. These HEMS can convey subtle guidance for consumption shifts that address intuitive consumption routines. However, the efficacy of the guidance depends on the regulation of self-consumption. This presentation provides experimental evidence on the interplay between both for the case of Croatia, where households that produce more electricity than they consume over the year are automatically re-classified as renewable traders and have additional administrative duties, as well as less favorable tax treatment. This creates perverse incentives to reduce PV generation or increase energy consumption. We document strong behavioral reactions within a real-life field experiment, which was conducted as part of the larger Horizon 2020 project NUDGE. The project collected both survey and smart meter data, which allows for a comprehensive picture of the behavioral reaction. According to the survey wave before the end of the year, almost half of the participants considered curtailing their PV output. According to the smart meter data, a sizable share did indeed take action by shutting down production or by powering additional devices to reduce the surplus near the end of the calendar year. In the final survey wave, prosumers provide ex-post insights on the specific measures taken to reduce surplus. Finally, we discuss insights from the experiment regarding the transparency and control offered by the HEMS, as well as how this can influence household behavior regarding the regulatory framework.