What Will Motivate More People to Make Their Homes More Energy Efficient?
Researchers find that certain kinds of financial incentives are more effective than others
Researchers find that certain kinds of financial incentives are more effective than others
How do you get people to reduce their home’s carbon footprint?
The U.S. government hopes the answer is to appeal to their pocketbooks. As part of the Inflation Reduction Act, the government is rolling out increased federal tax credits and rebates to help offset the cost of energy-efficient upgrades such as electric heat pumps and added insulation, and adoption of clean-energy technologies such as rooftop solar.
But recent research suggests that some financial incentives might be more effective than others when it comes to getting middle- and lower-income consumers to make energy upgrades. Researchers also have found that social pressure can be effective: Consumers notice what their neighbours do, and energy providers might be able to leverage that to get people to make changes, researchers say.
Here is a closer look at what researchers have found that does and doesn’t work:
One concern about many clean-energy tax credits is that historically they have disproportionately benefited the rich. Researchers say wealthier people are more likely to live in single-family homes, where it is easier to install things like rooftop solar and charge electric cars. It also could be that lower-income families have much lower taxes and thus benefit less from these kinds of tax breaks. So for many households, tax credits don’t talk.
But recent research from Lucas Davis, a professor at the University of California, Berkeley’s Haas School of Business, suggests that one of the enhanced energy tax credits in the Inflation Reduction Act could prove to be an exception to this rule.
In a study published this year, Davis and his co-authors found that 14% of U.S. households have a heat pump as their primary heating equipment, and that adoption levels are remarkably similar across different income levels, and even between homeowners and renters. Heat pumps often cost less than installing separate heating and cooling systems. And states with low electricity prices tend to have more heat-pump users since they cost less to operate in those areas.
Those findings suggest that the federal tax credit for purchasing and installing a heat pump—which increased to $2,000 from $300—has the potential to be more widely distributed across income levels than subsidies for many other low-carbon technologies, says Davis, and consequently get more people to invest in the equipment.
Another recent study looked at residential solar-adoption trajectories and why some communities lag behind others. The authors used satellite imagery and computer vision to capture the year-over-year growth of residential solar panels in 46 states between 2006 and 2017. They then looked at what the federal, state and municipal incentives were in place when the panels were installed.
They found that performance-based incentives—payments made to solar-panel owners based on how much electricity their system generates over a certain period—were associated with higher solar adoption rates in lower-income and middle-income communities than incentives tied to property taxes or rebates paid via lower state or municipal taxes.
In some cases, consumers can benefit from both performance-based incentives and net-metering programs, where homeowners can sell back to the utility any surplus power their solar system produces on sunny days, and use those credits to offset the cost of the power they pull from the grid at night or on cloudy days, resulting in a lower electric bill.
“Performance-based incentives reduce the upfront costs of solar panels for homeowners,” says Ram Rajagopal, an associate professor at Stanford University and one of the paper’s co-authors, explaining that if solar installers collect the performance-based incentives, homeowners can lease the panels at a discounted rate and still get the benefit of saving on their monthly electric bill.
AÂ third recent study, meanwhile, finds that net metering and high electricity are two big factors that correlate with rooftop-solar adoption across the U.S. The authors conclude that anticipated electricity-cost savings could stimulate further solar deployment, especially in areas where people are skeptical about global warming, and should be incorporated into promotional campaigns.
Taken together, the recent studies suggest that when it comes to solar adoption, incentives that provide an immediate financial benefit—say, lower upfront installation costs and savings on electricity bills—could be more motivating to low- and middle-income households than tax credits they have to wait to collect.
Researchers also are examining whether social networks and connections can be leveraged to convince more households to make energy upgrades.
“Social norms and interactions affect people’s behaviour, and alternative energy is no exception,” says Kenneth Gillingham, a professor of economics and senior associate dean at Yale School of the Environment, whose work suggests solar-panel adoptions tend to happen in regional or geographic clusters.
Among Gillingham’s findings are that households are more likely to install solar panels if they can see their neighbours’ solar panels from the road. A forthcoming study of his finds that solar-panel installers are likely to reduce prices for customers whose homes are in centralised locations, since their installation is likely to encourage others to follow suit.
Researchers also are studying if the neighbour effect can be used to recruit households in lower-income communities for state and municipal programs that offer free home-energy audits or subsidised solar-panel installations.
The administrators of such programs often struggle to identify which households are eligible. And potential customers often lack key information, are turned off by the paperwork or don’t trust program providers, says Kim Wolske, a research associate professor at the University of Chicago’s Harris School of Public Policy.
“Even when the energy upgrades are free, past research suggests it can be difficult to recruit lower-income households,” she says.
In a recent study, Wolske and her co-authors asked 7,680 low-income homeowners who recently received free installation of solar panels if they could refer other potential customers.
To identify the best approach, the authors divided homeowners into three groups. The control group received a postcard saying they could get $200 for every referral that signed up for solar panels. The second group received that same offer plus a $1 thank-you gift, designed to remind them of the value of the installed solar panels (about $20,000) and to encourage them to return the kindness by referring another homeowner. The third group received the $200 offer, the $1 gift and a form where three referrals could be made along with a stamped and addressed envelope.
The researchers found that homeowners in the third group, who received the stamped and addressed envelope, were 7.5 times as likely to make referrals than the control group, and those referrals were 5.2 times as likely to result in a new solar contract.
Energy providers, meanwhile, are testing whether they can nudge homeowners to make energy-efficiency improvements by comparing their energy use with that of neighbours.
Not only do such home-energy reports coax people into changing their behaviour—say, turning off unused lights or turning down the heat—they also encourage people to make energy-efficient updates in their home, like buying Energy Star appliances, research shows.
A study published in 2022Â found that energy consumption in homes that received a home-energy report remained low even after utilities stopped sending the reports and the owners sold the home, suggesting that the long-lasting benefits of these programs come from energy-efficient upgrades.
Another study in Southern California looked at the effect of sending home-energy reports and an additional nudge, called a peak energy report. Peak energy reports are automated phone calls or emails, reminding energy customers to reduce energy consumption during peak hours when demand for electricity exceeds supply.
The researchers found that when customers received both the home energy report and the peak-energy nudge, they reduced their electricity consumption on average by about 6.8%. Customers who received just one of the nudges also reduced their consumption but less so.
“Comparing customers provides a reference for energy usage and taps into their social consciousness,” says Robert Metcalfe, an associate professor of economics at the University of Southern California and author of the two studies on nudges.
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Georgetown agent Jamie Peva blends history and real estate on Instagram, turning local stories into a powerful sales strategy.
On a recent morning in Georgetown—Washington, D.C.’s oldest neighborhood—real-estate agent Jamie Peva strode down leafy N Street, brimming with historical tidbits.
Jackie Kennedy once lived on the street, he said. So did Ben Bradlee, former executive editor of the Washington Post, along with a former Miss America and a powerful U.S. Senator. Bradlee’s widow, author Sally Quinn, and Eric Schmidt, former CEO of Google, own stately homes there.
“I’ve seen a picture of Lyndon Johnson coming out of this house,” said Peva, passing a Federal-style brick mansion. “Also, the Beatles went to a lawn party here.”
Peva, a 60-year-old agent with Washington Fine Properties, has sold Georgetown real estate for over three decades, often traversing the neighborhood by bicycle. Of the roughly 2,500 houses in the historic neighborhood, he has been involved in the sale of 460, he estimated. A self-styled historian of the neighborhood, he knows stories behind its houses and their owners going back generations.
With a knack for lively storytelling, he shares his knowledge with some 37,500 Instagram followers, who have made Peva—sporting the bow ties he has worn since boarding school—an unlikely social-media influencer. Many of his followers are locals, and most have no plans to buy or sell real estate—until they do. It is then, according to Peva, that his spirited reels bring him to mind.
“It’s the digital version of a refrigerator magnet,” he said.
After Peva’s first video in November 2023, his eponymous Instagram account sparked a 10% increase in sales volume in the first year, and another 20% the next, he estimated. “It’s been very good for business, there is no question about it,” he said.
But Peva’s posts have also made him a local celebrity. As he walked down N street, the driver of a Mercedes station wagon slowed down to honk and wave. A lady walking a large dark gray dog stopped to ask what he was filming that day (a reel about a Colonial-era bottling plant.) Peva knew the dog from walking his two springers, Jumpy and Peggy-O, in the neighborhood.
“I need to make a video about the pooches of Georgetown,” he mused.
A growing number of real-estate agents now use social media to sell, and some have millions of followers with reels featuring ultraluxury pads, selling tips or reality TV-style reports on their daily lives. While Peva posts about his listings—and sometimes those of other agents—he mostly focuses on Georgetown history, local businesses and community events, saying his goal is to benefit both his business and the neighborhood.
“If we don’t find something genuinely interesting and worth sharing, we won’t do it,” said Peva’s daughter, Violet Peva, a New York social-media strategist who films, edits and posts his reels. “We cover many topics, not just real-estate information.”
Peva is originally from Connecticut, but has lived in Georgetown for over 30 years, currently in a cottage-style house with a white picket fence. Over the years, Georgetown has changed. The Georgetown Set, a powerful group of Cold War-era residents whose Sunday-night potluck dinners are said to have swayed U.S. policy, has long faded away. The community is still home to high-profile Washingtonians, including a Republican senator and several cabinet members. But it increasingly also attracts technology and finance executives, according to Peva. He now routinely signs nondisclosure agreements, ensuring privacy for wealthy clients. The shift has made him rethink his marketing approach.
“For years, a big part of our Georgetown business was made up of people who maintained a low profile,” he said. Real-estate agents were similarly low-key. Today, curb appeal is more important, he said, and agents are promoting themselves more. “As this change was underfoot, I was thinking that I needed to evolve myself too,” he said.
Though his own social-media use is mostly limited to following sailing accounts, he asked his daughter to help him post his listings online. Violet, now 26, started coming to D.C. once a month to film his reels. After an early video, on a condominium building called the Elliott, her sister Fern called her to report: “Daddy’s blowing up on Instagram,” Violet recalled. The reel got over 50,000 views. The next two each drew over 300,000. Peva’s most popular post ever, with over 838,000 views, was about the Grateful Dead playing in Georgetown. Sometimes, Peva interviews Georgetowners such as Quinn, the author, or Jamie Stachowski, the owner of a local butcher shop.
Peva, who majored in history in college, now spends up to two hours a day on research, usually in the morning while on his stationery bike. Online, he pores over old newspapers or the Library of Congress website, and he has a collection of articles and books—in and out of print—about Georgetown.
Companies often approach Peva for promotional posts, he said, but he turns them down, feeling that followers would lose interest in constant commercials. One exception is a recent paid post on Mount Vernon, the former home of George Washington. Peva wanted to share its history, he said, and didn’t want to lose the opportunity to another Instagrammer.
Anthony Arend, a professor at Georgetown University, has lived in his current home for 19 years without any plans to sell or buy real estate. But he follows Peva and often likes his posts.
“He is very charismatic, he is energetic, and he obviously knows a lot about the community,” said Arend, who has referred house-hunting friends to Peva.
One of Peva’s biggest deals—the $10.5 million sale of a 19th-century Italianate mansion—came after he made two 2024 reels featuring the property. In March, he sold the longtime O Street home of Tim and Jane Matz for $5.8 million after featuring it on his Instagram. Peva had showed them the home 25 years earlier, with Violet in a baby carrier on his back.
Last year, Kate Watts, 49, a digital consultant, called Peva to sell her late father’s three-bedroom house on Q Street; her husband had seen Peva on Instagram. In an October reel, Peva praised the architecture of the house, designed by modernist Hugh Newell Jacobsen. Halfway through, he mentioned an open house the next day, ending with an upbeat: “Did I also mention this house is for sale? $3.75 million!” The reel got 27,000 views, the open house was packed, and the buyers made an offer at the list price on the same day.