Is renewable energy contagious? Research shows a ‘peer effect’

Source: Nathanael Massey, E&E reporter • Posted: Tuesday, November 6, 2012

Outside of policy debates over tax credits and carbon pricing, something much simpler may be holding back the spread of renewable energy: its novelty.

For much of the country’s consumer base, new energy technologies like photovoltaic arrays and smart meters represent an untried frontier. Without knowledge of the benefits these technologies can bring, consumers are hesitant to embrace them.

As familiarity with renewable energy grows, however, so does public acceptance. Indeed, two recent studies — one into the spread of smart grid technology and the other into solar installations — suggest that exposure to renewable technologies significantly increases rates of adoption among consumers.

The study into solar, co-authored by researchers at the Yale School of Forestry and Environmental Studies and the New York University Stern School of Business, identifies a “peer effect” among neighbors within a given ZIP code. When one household installs solar, it increases the likelihood that nearby houses will follow suit, they found, attributing their findings to both word-of-mouth information sharing and a culture of one-upmanship.

Meanwhile, a survey by the Smart Grid Consumer Collaborative (SGCC) research group finds that, although roughly half of Americans say they have never heard of the smart grid, even basic education markedly increases the favorability of the technology’s public reception.

“One of the most important things we found was that favorability increases after consumers hear about smart grid benefits,” said Annie Haas, a communication consultant with SGCC.

Among respondents who said they were somewhat familiar with the smart grid, only 52 percent viewed the technology favorably, she said. After a brief description was given of the technology’s qualities and flaws, that number rose to 70 percent.

The Joneses go solar

“Keeping up with the Joneses,” or maintaining status by displaying wealth, is as familiar to Americans as fireworks and apple pie. According to new research by Yale assistant professor Ken Gillingham and New York University professor Bryan Bollinger, that holds true even when the Joneses decide to install solar panels on their roof.

The study found that residents of a particular ZIP code were significantly more likely to install solar panels if a neighbor had already done so. This result held true even after the researchers controlled for other possible influences, such as regional marketing efforts and clustering between people of similar environmental preferences, Bollinger said.

Reviewing data collected during the implementation of the California Solar Initiative, a 10-year rebate program that ran from 2001 to 2011, they found that a 10 percent increase in solar users for a particular ZIP code led to a 54 percent increase in that ZIP code’s adoption of solar panels.

“We think that both information sharing and one-upmanship are plausible explanations for our results,” Bollinger said.

Like smart grid technology, the solar sector is growing quickly but remains a marginal share of the nation’s energy mix. Seeing a neighbor commit to solar power, or hearing a neighbor rationalize the benefits of solar’s upfront costs, can reduce uncertainty over the value of installation, Bollinger said.

This peer effect also appears to be influenced by the size of the installation, according to the study. The larger the installation, the more likely it was to predict future installments on neighboring property, it found.

Making the intangible tangible

While solar arrays are often prominently displayed — a quality that has both hindered and benefited them over the years — smart grid technology is largely invisible.

Utilities have also been less than aggressive in extolling the benefits of available technologies to their customers, said Patty Durand, executive director of SGCC.

“I think a lot of the utilities have been caught by surprise — they thought of these things as technology or infrastructure updates” and not a new generation of energy products, she said. “What we’re looking at is potentially a much bigger change.”

Because the grid has traditionally leaned toward a supply-side model, there has been little need for utilities to communicate in depth with their consumer base, she said. With movement toward the smart grid, however, that is likely to change, she added — particularly as customers begin to reap the benefits of energy efficiency technology purchased today

The latest iteration of SGCC’s Consumer Pulse Survey finds that, despite strong growth within the sector, public knowledge and understanding about the smart grid remain largely unchanged from a year ago, when the first wave of the survey was conducted. Now, as then, only about half of consumers — 54 percent — say they have never heard of the smart grid, and 21 percent have heard the term but are unfamiliar with its meaning.

Of the remaining 25 percent, half of respondents feel positively about the smart grid. Once they receive further information about it — both pros and cons — that figure rises to more than two-thirds.

While acknowledging that there remains much to do to familiarize the public with the benefits of smart grid technology, SGCC’s Haas said the spread of social media and the prevalence of the Internet in American homes could only benefit that effort.

Like the peer effect seen in solar, “there could be a viral effect with social media and the Internet around smart grids,” she said. “The smart grid is intangible, but through information sharing, the Internet and social media can make it tangible.”