London, U.K. --- (METERING.COM) --- January 21, 2013 - Behavioral programs to encourage people to use less energy in their home are potentially more cost effective than other energy efficiency options such as insulation, and need to be more rigorously tested, according to the U.K. think tank Policy Exchange.

From evidence both internationally and in the U.K., comparative billing of a household with neighbors appears to be particularly cost effective – in the range £11-16 per MWh of energy saved – with the potential to save as much as £70 a year.

The report, Smarter, Greener, Cheaper, reviews various options for encouraging the greater use of behavioral energy programs in the domestic sector. It concludes the best option is to extend an existing energy efficiency subsidy scheme – the Energy Company Obligation (ECO) – to allow schemes that can help households to cut energy use to compete for subsidies against support for existing measures such as solid wall insulation. Eligible schemes could include home energy visits that show people where they are wasting energy, better leaflets on how to cut bills or comparisons of energy use.

Besides supporting programs that help cut both electricity and gas use, ECO’s structure could also allow third parties, such as charities and companies who are expert in behavior change, to compete for the ECO subsidy. It may also if its efficacy is proven, help lower the overall cost of the ECO program, which is paid for through energy bills.

“Helping people to cut their rising energy bills and avoid wasting energy is one of the most important things the government can do,” said the report’s author, Guy Newey. “Smart meters have the potential to help change the way we use energy in the homes. But they won’t change habits on their own. Households need support to understand where they can make savings.”

According to the report, behavioral energy programs are more than seven times cheaper to implement than building new power generation. Such schemes also offer a potentially cost-effective way of cutting carbon emissions.

The report also makes various policy recommendations. Among these the government should work closely with community groups and civil society to act as champions for smart meters, and a national advertising campaign should be launched to highlight the benefits of smart meters, and show how the program fits in with other energy efficiency policies, such as the Green Deal.

There also needs to be an urgent review of Ofgem and the government’s attempts to ‘simplify’ the number of energy tariffs, as this risks undermining the potential of smart meters to offer households innovative tariffs.