Financial Incentives and Intrinsic Motives for Residents' Participation in Demand Response Programs

Many utilities have provided financial incentives to encourage residential customers to enroll in direct load control (DLC) programs to harness demand response resources. However, financial incentives do not always result in a high participation rate. This study aims to assess residential customers' willingness to enroll in utility-run DLC programs and analyze how incentives affect participation intention.

A survey employing the contingent valuation method collected 591 responses from a random sample of U.S. Midwest residents. We prompted a dichotomous choice question to some respondents on whether to enroll in a DLC program with payments ranging from $10-$200, while asking others' participation intention without mentioning a financial incentive.

Overall, 57.4% of residents were willing to enroll, and the estimated willingness to accept DLC was $10-$42 per year. We found a U-shaped pattern between payment and willingness to participate, which suggests the intrinsic motivations for DLC participation can be crowded out by monetary incentives. Our analysis estimated the crowded-out intrinsic motivations valued at $30-$157 annually, varied by program type.

Additionally, we found several factors affecting acceptance of DLC programs, including knowledge learning, concerns of comfort loss, and personal perception of demand response for energy savings, reliability, and environmental benefits. Findings from this study have significant policy implications and help improve the design of utility DLC programs.