MIT Study Reveals How Households Can Escape Energy Poverty

Energy poverty is a major problem around the world, affecting families in the richest countries as well as the poorest ones.

Volatile and rising energy prices are hurting families’ bottom lines and even causing many to fall below the poverty line in diverse economic contexts around the world.

In the United States, energy prices are rising so rapidly that they are outpacing runaway inflation rates to reach a 5% annual increase, resulting in blisteringly high utility bills. In the Netherlands, over half a million homes qualify as energy-impoverished, even though they have the 16th highest per capita gross domestic product on the planet. The technical definition of ‘energy poverty’ is when a household spends eight percent or more of its annual income on energy bills.
Four primary factors impacting your electricity bill include the cost of the fuel used to produce the electricity used in your home, the cost of services that transmit and transport that energy, the weather – which impacts those aforementioned services as well as the production levels of variable energy sources such as solar and wind power – and, of course, the amount of energy your household consumes. But there are additional, external factors that may actually be the most important of all – public policy and technological innovation.

A new study by MIT researchers investigated the impact of energy coaching with smart technology interventions to alleviate energy poverty in Amsterdam, and the results were jaw-dropping. For the experiment, households living in energy poverty were given ‘coaching’ sessions about how to lower their energy use behaviorally, and were offered smart energy devices that monitor real-time gas and electricity consumption and relay this information back to the household, comparing the consumption levels to their income. As a result, many participants were able to cut their energy expenses in half, and a whopping 75% of the households were able to move out of energy poverty.

So what, exactly, were these families coached to do differently? Findings show that the most effective behavioral changes in the study households included “things such as only heating rooms that were in use and unplugging devices not being used,” summarizes a recent MIT news article. “Both of those changes save energy, but their benefits were not always understood by residents before they received energy coaching,” the write-up went on to say.

Indeed, one of the most important takeaways from the study is that providing households with energy-smart technologies is not enough. They must also be provided with basic energy literacy for the information provided by the meter to drive behavioral change and meaningfully lower energy use, thereby lowering families’ energy expenditures.

“Energy poverty afflicts families all over the world. With empirical evidence on which policies work, governments could focus their efforts more effectively,” Fábio Duarte, associate director of MIT’s Senseable City Lab, and a co-author of the paper was quoted by MIT News.
Of course, what works in the Netherlands will not necessarily work in other countries, and changing our personal behaviors can only go so far to controlling our utility bills. The amount that we pay for unit of energy used varies enormously depending on where in the world we are located, what energy sources make up the energy mix, the amount of energy produced versus imported, the relative strength of our currency, and the policy environment. Some nations may be cash poor, but energy rich and therefore pay next to nothing for household electricity – such as the case in Venezuela. Other countries may be relatively wealthy but their governments charge residential end-user electricity prices that drive eletricity prices to be among the highest in the world – such as in Denmark, Belgium, and Sweden.

But while we cannot control everything about our own energy poverty levels, the MIT study shows that there is a lot we can do to take control of our own energy use and related finances. If you want to lower your energy bills, buy a smart meter – and a copy of Energy Efficiency for Dummies.