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To get people to switch to green energy. . . make the switch for them

An opt-out rather than opt-in model for renewable power programs yields high participation with few downsides
March 16, 2021

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When utilities automatically enroll customers in a green energy package, at least 80% of households will stick with it after several years even if it is slightly more expensive than electricity from conventional sources, a new study reveals.

Past research has shown that people will initially accept these so-called ‘green energy default’ programs. But there was little understanding of how such programs fare over the longer term, or whether they would have unwelcome knock-on effects such as increased energy use. Studies also hadn’t tested whether the programs would be accepted by business customers, who might be more concerned with the bottom line.

Green defaults “can have a remarkable immediate impact on reducing resource consumption and CO2 emissions, both in the household and business sectors,” says study team member Ulf Liebe, a sociologist at the University of Warwick in the UK.

Liebe and his collaborators, Jennifer Gewinner and Andreas Diekmann of ETH Zurich in Switzerland, gathered information on green energy enrollment and yearly power use from two electricity suppliers in Switzerland, dubbed Supplier A and Supplier B. They had 6 years of data from Supplier A, which serves a total of 10,659 households and 1,139 businesses and introduced a green energy default program in 2009. They had 3 years of data from Supplier B, which serves 223,248 households and 7,633 businesses and introduced green energy defaults in 2016.

For both suppliers, the green energy came along with a surcharge of CHF0.01 per kilowatt hour (kWh). This represented a price premium of 3.6–8.3% for households and 5.8–14.3% for businesses (electricity rates vary depending on the time of day).

Just 3% of Supplier A’s household and business customers had signed up for renewable energy before the green default program was introduced. But 85% of households initially accepted the green default, and 80% still had a green energy package 4 years after the switch. The results for businesses are slightly weaker but still impressive: 77% of businesses accepted the green default at first, and 71% still had it 4 years later, the researchers report in Nature Human Behaviour..

For Supplier B the results of the switch are broadly similar, but even more dramatic: only 1.2% of households had green energy before the green default program, but 88.6% initially accepted green energy when the default program was introduced and 88% still had it a year later. Just 0.7% of businesses had green energy before the default program, 84.5% accepted the green energy package initially, and 82.7% still had it a year later.

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One of the worries about green default programs has been that customers with renewable energy they might feel freer to use more of it, resulting in higher electricity consumption overall. But the researchers found no evidence that this was the case among either business or household customers.

Many studies of green defaults and similar programs just focus on whether they change people’s behavior – not on whether they actually lead to lower carbon emissions, Liebe says.

But Liebe and his collaborators showed that if applied at a large scale, green default programs could have a major decarbonization impact. For example, suppose that 80% of households in Germany (a similar percentage to those that kept the green energy package over time in the current study) had green energy. This would save about 45 million tonnes of carbon dioxide emissions compared to the status quo. The benefits to households – accounting for both the increased cost of green energy and the cost of carbon emissions to society – would amount to roughly €1.24 billion, they calculated.

Source: Liebe U. et al.Large and persistent effects of green energy defaults in the household and business sectors.” Nature Human Behaviour 2021.

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