The deterring effect of monetary costs on smart meter adoption

• Published in: Applied energy 2022-07, Vol.318, p.119247, Article 119247
• Main Author: Tsvetanov, Tsvetan
• Format: Article
• Language: English
• Subjects: Adoption barriers; Costs; Experiment; Smart meters
• ISSN: 0306-2619; 1872-9118
• DOI: 10.1016/j.apenergy.2022.119247

•Hypothetical experiment with broad geographic scope and nationally representative sample of US households.•Monetary costs can have substantial deterring effect on residential smart meter adoption.•Subsidy covering smart meter installation costs would be justified from a benefit-cost perspective.•Households react differently to installation costs depending on their electricity consumption and perception of technology. This paper utilizes an experiment embedded within a hypothetical survey to a nationally representative sample of US households to quantify the extent to which monetary installation costs (in the form of a monthly electric bill surcharge) can present a barrier to the residential adoption of smart meters. The results suggest that a $2.50/month surcharge would decrease the average probability of smart meter adoption by 18 percentage points. This estimate is robust to a variety of alternative empirical specifications and sample restrictions. There is considerable heterogeneity in the estimated effect based on household electricity consumption, familiarity with smart meter technology, and perceived accuracy of traditional meters. These findings have important implications for electricity providers and policymakers, as they suggest that eliminating installation charges would be justified from a benefit-cost perspective and point to potential gains from redesigning smart meter policy to account for household heterogeneity.