An energy label in francs and centimes?

An energy label such as the "Energy Guide Label" could also help to save more energy in this country. The potential for more energy efficiency would definitely be there, now shows a new study financed by the Swiss Federal Office of Energy (SFOE). "Households could save 20 to 30 percent more electricity than they do now," says study leader Prof. Massimo Filippini, adding that today there are "considerable inefficiencies" in the purchase and use of electrical household appliances. Together with Nina Boogen and Nilkanth Kumar from ETH Zurich and Dr. Julia Blasch from the Free University of Amsterdam, the ETH Zurich economist conducted a large survey on Swiss electricity consumption.

Using questionnaires, the team surveyed 8,400 households in the country to determine, among other things, which electrical appliances are used how intensively and how much electricity they actually consume. The latter was determined using data from nine participating electricity companies.

Based on this data, the researchers used statistical methods to calculate the energy efficiency of each household. They then benchmarked the households' electricity consumption against the estimated electricity consumption from a best-practice model. The economists determined the potential electricity savings of 20 to 30 percent from the inefficiency of the households measured against the best-practice model. Specifically, they found "22 percent structural inefficiency," such as that caused by power-hungry outdated appliances that last for years, and 11 percent "short-term inefficiency," which is when you leave an appliance in standby mode even though you could turn it off at any time.

"Buying household appliances can be economically complex," says Massimo Filippini, describing one of the reasons for today's inefficiencies. On the one hand, such decisions require a certain amount of energy knowledge: How much electricity does it take to heat water in a pressure stove compared to a saucepan with a lid on it? How much does a kilowatt hour of electricity cost? What are the costs of using an appliance? For example: How much does a wash cycle at 60 °C cost? In the survey, most people could not answer such questions correctly.

 Calculations that have it all

According to economist Massimo Filippini, another aspect is no less important: "In order to make informed energy-related purchasing decisions, a certain level of financial literacy is required; people must be able to perform an investment calculation when buying new appliances." After all, energy-efficient appliances have a handicap in the sales transaction: they usually look more expensive than they are, because the electricity costs they save year after year are not reflected in the purchase price. The energy label affixed to common appliances such as refrigerators, stoves, tumble dryers and ovens does indicate the expected annual electricity consumption, but in the physical unit of kilowatt hours. To find out the electricity costs and ultimately the total costs over the assumed lifetime of an appliance, you have to calculate them. And these calculations are tricky, as illustrated by a task from the study's questionnaire.

The following task had to be solved: Let's assume that there are two identical refrigerators in the store. The only difference between them is their price and electricity consumption: Model A costs 3300 Swiss francs and consumes 100 kWh of electricity per year, while Model B costs 2800 Swiss francs and consumes 200 kWh of electricity per year. Which refrigerator has the lower total cost after ten years if one kWh always costs 20 centimes? The correct answer to this question (model B) was given by just 30 percent of the respondents. This was despite the fact that the researchers had even provided the kilowatt-hour price, i.e. information that is missing from the energy label of the real appliances. In the real purchase of household appliances, the hurdle for correct cost estimates is therefore likely to be even higher.

The sobering conclusion of the study: Two thirds of consumers were unable to correctly calculate the total costs (purchase price plus energy costs for ten years) and thus correctly compare the two refrigerators from an economic perspective. Incidentally, the fact that model A consumes less electricity than model B and is therefore more ecologically sensible was a deliberate 'sleight of hand' on the part of the scientists: They wanted to ensure that the test subjects in the context of the survey did not make the simplistic assumption that energy-efficient appliances would be worthwhile over a long period of time (because the energy costs are correspondingly lower), but that they actually calculated the total costs reliably.

According to the Energy Strategy 2050, average per capita electricity consumption in Switzerland should be three percent lower by 2020 than in 2000. The target for 2035 is even more ambitious: average per capita electricity consumption should then be as much as 13 percent lower than in 2000. To achieve these targets, households can make a significant contribution.

Electricity declaration in monetary form promotes energy efficiency

The researchers subsequently wanted to find out how consumers could more successfully estimate the lifetime costs of household appliances. With subgroups of the household survey, they tested alternatives to the current calculation bases. ETH researcher Nina Boogen says of the results: "If people see the electricity consumption of household appliances in francs and centimes instead of in kilowatt hours, as is the case today, they make rational, well-informed purchasing decisions in favor of greater energy efficiency significantly more often." The proportion of correct answers then increased significantly. The use of an online calculator that allowed respondents to calculate the lifetime costs of electrical appliances also had a good effect. There was a slight improvement when respondents were given brief instructions on how to correctly calculate the abstract quantity "kilowatt hours".

 Energy label like in the USA?

From an energy policy perspective, the team of economists therefore believes it would make sense if manufacturers of household appliances were obliged in future to indicate the estimated annual electricity costs of refrigerators, tumble dryers, etc. in a clearly visible manner on product packaging. Switzerland could follow the example of the "Energy Guide Label" (US-FTC, 2017) in the USA. On this yellow label, the estimated annual electricity costs of an appliance are shown in bold black numbers on a scale that takes into account the regionally varying electricity prices. This measure would be relatively easy to implement, estimates Massimo Filippini. At the same time, it would have a long-term effect: "Once a household appliance is purchased, its energy efficiency often influences electricity consumption for years."

In order to further increase the important purchasing competence and also to promote general energy knowledge, the research team proposes further energy policy measures - from information brochures and campaigns to courses in schools and for consumers to mobile apps that help calculate the lifetime costs of household appliances. However, it is not up to the scientists to decide which of these measures will be implemented one day. The ball is now in the politicians' court.

The final report on the project "Energy efficiency, bounded rationality and energy-related financial literacy in the Swiss household sector" can be found at: https://www.aramis.admin.ch/Default.aspx?DocumentID=46444&Load=true

For information on the project, please contact Dr. Anne-Kathrin Faust, anne-kathrin.faust@bfe.admin.ch, head of the SFOE's Energy, Economy, Society research program.

For more technical papers on research, pilot, demonstration and lighthouse projects in the field of Energy-Economy-Society (EWG), please visit. www.bfe.admin.ch/CT/divers