4. Consumer Motivations to Participate

HP Open Mind LogoReasons for not upgrading energy efficiency prior to ESI

Scheme participants cite a variety of reasons for not upgrading their energy efficiency prior to undertaking an ESI activity, ranging from simple lack of interest through to waiting for the right time to act. However, two barriers dominate:

  • "The product...was still working so I didn't see the need to upgrade..." - mentioned by 58% of respondents.
    • This was expressed at a very similar level across all demographic groups and even ESI categories, although people who had water heating installed were slightly more likely to nominate this (63%).
  • "I had already decided to upgrade to the more efficient product and was just waiting for the right time to do so" – mentioned by 43%.
    • Again, there were few marked differences between different types of consumers in this, although home owners were far more likely to mention it than tenants (45% against 21%).
    • 45% of tenants cited the fact that "as a tenant I am not responsible for such purchasing decisions" as their primary reason for not previously acting.

Chart 14. Reasons for not upgrading prior to ESI participation

 A line graph showing reasons given for not upgrading equipment prior to ESI participation. Results are shown by percentage, with a separate line for each category of equipment. For more efficient water heating, 63% saw no need to upgrade as their existing heater was still working, 52% had already decided to upgrade but were waiting for the right time, 14% preferred to replace appliances with familiar products, 17% were not sure of the most energy efficient heater to buy, 21% were focussed on concerns other than energy use, 20% didn't think the benefit of increased efficiency was worth the expense, 11% did not have time to find the most efficient heater and 10% had not thought much about improving energy efficiency for their water heater. In the case of more efficient heating, 53% did not see the need to upgrade since their existing heating was still functional, 48% had decided to upgrade but were waiting for the right time, 25% usually replace their heater with a familiar product, 20% were not sure of the most energy efficient option, 22% were focussed on concerns other than energy use, 28% didn't think the benefit of reduced energy bills justified the expense of an upgrade, 7% did not have time to find the most efficient heating and 13% had not though much about improving energy efficiency from their heating. For low energy light globes, 57% did not see the need to upgrade as their existing lights were functional, 35% had decided to upgrade but were still waiting for the right time, 23% usually replace their globes with familiar ones, 18% were not sure which was the most efficient globe to buy, 15% were focussed on concerns other than energy use, 18% didn't think the increase in efficiency justified the cost of the globes, 13% did not have the time to find the most efficient product, 13% had not thought much about improving energy efficiency from their light globes, and 3% said that they were tenants, and as such not responsible for purchasing light globes. For installation of more efficient shower roses, 54% did not see the need to upgrade their existing functional roses, 41% had already decided to upgrade and were waiting for the right time, 27% usually replace their shower rose with a familiar type, 27% were unsure of the most efficient shower rose to buy, 25% were focussed on concerns other than energy efficiency, 18% didn't think the increased efficiency justified the expense of a replacement, 18% did not have time to find the most efficient replacement, 18% had not thought much about improving energy efficiency from their shower rose, and 10% were tenants who indicated they were not responsible for the purchase. Over the total sample, 58% of respondents did not upgrade their equipment because what they had at the time was still working, 43% had already decided to upgrade but were waiting for the right time, 22% indicated they preferred to replace equipment with familiar products, 21% were not sure of the most efficient product to buy, 20% were focussed on concerns other than energy use, 19% didn't think the efficiency benefit of the upgrade justified the cost, 14% did not have time to find the most efficient product, 14% had not thought much about improving energy efficiency from that product and 4% were tenants who were not responsible for such purchasing decisions.

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A1. Thinking back to before you [ACTIVITY FROM QUOTA], which of the following reasons describe why you had not decided to improve energy efficiency by doing this previously?

Base: Respondents most involved with scheme, n=838

A number of the reasons for inaction mentioned by consumers indicate that the intervention of ESI may have led them to take an action that they would not otherwise have taken, namely:

  • The product was still working;
  • The household was focused on other concerns;
  • Usually replace with a product familiar with;
  • Didn't have time to find the product;
  • They couldn't see the benefits of replacement outweighing the costs; or
  • They simply hadn't thought about it much.

There are relatively few differences apparent between consumers from the different ESI product categories. However, one interesting difference relates to cost-benefit assessments; 28% of those who installed more efficient heating, one of the higher cost categories, hadn't previously seen a nett benefit in upgrading. The implication is that the ESI may have tilted the equation in favour of action.

This focus on consumer inertia as a key barrier to acting earlier on energy efficiency upgrades is not being acknowledged by APs. They place far more emphasis on affordability as a key barrier to consumers taking action, and also consider that consumers do not see the nett benefit of undertaking upgrades. This simple cost equation means that, for APs, the intervention of government in offering assistance by way of the ESI is critical to prompting action. Their ideal solution is, therefore, to seek increased incentives to increase the apparent nett benefit to participating consumers3.

Reasons for taking part in the ESI scheme

Economic considerations were the most commonly mentioned motivation for upgrading energy efficiency under the ESI scheme, either in terms of the savings to be gained from more energy efficiency equipment, or the direct incentive on offer:

  • "To reduce your energy bills" - mentioned by 60% of respondents.
    • This was particularly important in relation to higher value installations such as water or space heating (71% and 72% respectively mentioned this as a consideration), and far less important for the lowest value activities (e.g. 49% of shower rose installations).
    • Demographically, it was a factor of greater importance to young and middle families (63% and 69% respectively), and for those with larger households (and houses).
      • It was mentioned by 57% of those from 1-2 person households, 62% from 3-5 person households, and 71% of those from larger households.
      • Similarly, mentions of energy bill savings rose from 57% for those living in 1-2 bedroom homes to 67% for 5 or more bedroom homes.
  • "Because of the incentive provided by the installer" – mentioned by 50%.
    • The incentive appears to have been of greater importance to younger households; it was mentioned by 64% of young singles/couples, and 67% of those with young families, but only 46% of empty nesters (mature singles/couples).

Other important motivations included environmental concerns, convenience, and information/advertising:

  • "To do your bit for the environment" - mentioned by 54% of respondents.
    • Younger participants were considerably more likely to cite environmental motivations – 70% of those aged 18-34, compared with 59% of 35-54 year olds, and 49% of those aged 55 and over.
  • "Because the installer made it convenient to upgrade" – 43% mentioned this factor.
    • Lighting installations were far more likely to be linked to such convenience (55%), as were shower roses (48%); both were felt to be more likely to have been installed in response to "door knocker" actions. Since these two activities have accounted for around 95% of all ESI activity since 2009 (against their around 60% share of the survey sample), this factor is likely to have been even more important across the whole scheme.
  • "Information provided to me by an accredited person encouraged me..." – mentioned by 30%.
    • There are few inter-group differences in mentions of this factor, although it was mentioned more frequently by participants from Cold Regional locations, suggesting that there may have been APs operating in that area who have been particularly effective at promoting the scheme to householders.
  • "Attracted by the advertising I saw/heard" – not a major factor, at 18%.
    • Mentions of advertising fell from 23% of the 2009 installations, to 20% of 2010, and only 10% of 2011, indicating that the primary role of advertising was in the earlier stages of the scheme.
    • We understand that direct Government advertising of the ESI scheme only occurred in 2009. However, it is not unusual for such attribution to continue beyond the actual period of advertising.

Chart 15. Reasons for taking part in the ESI scheme

A line graph showing reasons for taking part in the ESI scheme. Of those who responded that they wanted to reduce their energy bills, 72% installed more efficient water heating, 71% installed more efficient heating, 57% fitted low energy light globes and 49% installed a more efficient shower rose. Of those who responded that they wanted to do their bit for the environment, 64% installed more efficient water heating, 38% installed more efficient heating, 46% fitted low energy light globes and 54% installed a more efficient shower rose. Of those who responded 'Because of the incentive provided by the installer', 54% installed more efficient water heating, 45% installed more efficient heating, 50% fitted low energy light globes and 49% installed a more efficient shower rose. Of those who responded 'Because the installer made it convenient to upgrade', 27% installed more efficient water heating, 35% installed more efficient heating, 55% fitted low energy light globes and 48% installed a more efficient shower rose. Of those who responded 'Information provided to me by an accredited person encouraged me to do so', 31% installed more efficient water heating, 27% installed more efficient heating, 28% fitted low energy light globes and 33% installed a more efficient shower rose. For the response 'Attracted by advertising I saw/heard', 18% installed more efficient water heating, 13% installed more efficient heating, 16% fitted low energy light globes and 21% installed a more efficient shower rose. Of those responded 'Because other people I know were doing it and seemed a good idea', 14% installed more efficient water heating, 12% installed more efficient heating, 16% fitted low energy light globes and 18% installed a more efficient shower rose. Of those who responded 'Attracted by media reports about it', 14% installed more efficient water heating, 12% installed more efficient heating, 16% fitted low energy light globes and18% installed a more efficient shower rose. Of those who responded 'Our landlord wanted to', 2% installed a more efficient show rose and 0% installed more efficient water heating, efficient heating or fitted low energy light globes.

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A2. And why did you decide to improve energy efficiency by [ACTIVITY FROM QUOTA] under the Energy Saver Incentive scheme, rather than replacing the product with one of similar efficiency?

Base: Respondents most involved with scheme, n=838

The perceptions of APs align directly with those of consumers in relation to what motivated a decision to undertake an energy efficiency upgrade under the ESI scheme:

  • To reduce energy bills;
  • To obtain a discount on the cost of the upgrade; and
  • To contribute to a cleaner, less polluted environment.

This alignment of views suggests that these are the key benefits of the scheme that can be used most persuasively and effectively in any marketing efforts to promote uptake of the ESI; a focus on the economic and environmental benefits of acting will resound with both audiences, and will provide APs with an appropriate way to raise upgrades with consumers.

Nature of the incentive provided

Overall, installation of a free product was the primary form of incentive provided, followed by discounts. Not surprisingly, the nature of the incentive differed strongly between product categories, with low value products offered free, while discounts and government rebates played a more important role for higher value products. We note that consumers themselves mentioned "government rebates", suggesting that they maynot understand the nature of the ESI, and that the incentive provided by the ESI scheme may be difficult to clearly communicate to consumers. The key incentives types were:

  • Free product installed - mentioned by 61% overall.
    • This was almost the universal incentive for lighting (98%) and shower roses (93%), but was rarely if ever provided for other categories.
  • A discount - mentioned by 24% overall.
    • In contrast, this was the primary incentive for water heating (66%) and space heating (55%), but rarely provided for low value categories.
  • Government rebates - mentioned by 8% overall.
    • An important incentive for space heating (28%) and water heating (18%), but not mentioned at all in relation to low value categories.

In 4% of cases, consumers claim that no incentive was provided at all, with this rising to 10% in the case of space heating.

Chart 16. Nature of incentives received by scheme participants

Chart 16 shows the nature of incentives received by scheme participants. For Free product installed the total sample was 61%, the Fitted low energy light globe was 98%, Installed more efficient water heating was 4%, the Installed a more efficient shower rose is 93%, and the Installed more efficient heating was 0%.For A discount the total sample was 24%, Installed more efficient water heating was 66%, the Installed a more efficient showerrose is 2%, and the Installed more efficient heating was 55%.For Government rebates the total sample was 8%, Installed more efficient water heating was 18%, and the Installed more efficient heating was 28%.For No incentive was provided the total sample was 4%, the Fitted low energy light globe was 2%, Installed more efficient water heating was 5%, the Installed a more efficient shower rose is 4%, and the Installed more efficient heating was 10%.For Don't know the total sample was 1%, Installed more efficient water heating was 3%, and the Installed more efficient heating was 3%.

A3. What type of incentive was provided for the installation or fitting?

Base: Respondents most involved with scheme, n=838

Nett installation costs to the consumer

After taking into account any incentive provided by the AP, the average cost to scheme participants was $794. However, this average varied dramatically between product categories:

  • Lighting averaged only $0.60 per installation because the products were provided free in 98% of cases;
  • Shower roses averaged a nett cost to the consumer of $19;
  • Insulation – the very small number of installations included in the survey averaged at $477;
  • Water heating ($2,116) and space heating ($2,772) were easily the most costly activities to the consumer.

Average costs rose sharply between 2009 and 2010, from $600 to $904, before settling back slightly in 2011 to $889; this very large increase reflects the shift from lower value activities in the first year of the scheme towards a stronger focus on higher value activities in subsequent years.

Chart 17. Cost to the consumer after receiving incentive

 A bar graph showing how much additional cost was incurred beyond the money provided through the ESI incentives for each category of equipment. For 'More efficient water heating', 50% of respondents paid more than $2000 beyond the incentive, with 30% paid between $500 and $2000 and the majority of the remainder being unsure (12%) with a small number (4% each) paying between $100 and $500, or no extra payment. For 'More efficient heating', 50% paid over $2000, 30% between $500 and $2000, 12% were unsure and 4% each paid between $100 and $500, or did not have to pay anything. For 'Low energy light globe', 95% did not have to pay any extra, with the remainder paying $20 or less. A 'More efficient shower rose' incurred no extra cost for 80% of respondents, with 16% indicating $20 or less and the remainder either unsure (1%) or in the $20 to $100 range (2%). Over the total sample then, 56% indicated no extra payments were necessary, 21% had to pay over $2000, 10% paid between $500 and $2000, 7% paid $20 or less, 4% were unsure and a small fraction (1% each) paid between $20 and $100, or between $100 and $500.

A4. And how much did it cost to [ACTIVITY FROM QUOTA], after taking into account the incentive you received?

Base: Respondents most involved with scheme, n=838

Average costs were lowest in Melbourne ($614) and Mild Regional areas ($885), and substantially higher in Hot Regional ($1,134) and Cold Regional areas ($1,654). The latter difference may reflect the higher costs of space heating installations, which were strongly concentrated in Cold Regional areas.

Likelihood of proceeding with upgrade without an incentive

More than half of those surveyed claimed that they would have been likely to have proceeded with the activity at the time that they participated in the ESI scheme even if no incentive had been provided. This was particularly the case for space heating, for which 70% of scheme participants claimed that they would have either definitely or probably gone ahead with the upgrade/installation. Even for shower roses, just under half of all participants considered that they would have been likely to upgrade without an incentive.

While this suggests a limited role for the ESI of initiating changes in behaviour, consumers' responses to this question sit at odds with their claimed reasons for not acting prior to their involvement in the scheme, namely:

  • The product was still working;
  • The household was focused on other concerns;
  • They couldn't see the benefits of replacement outweighing the costs; or
  • They simply hadn't thought about it much.

Chart 18. Likelihood of undertaking energy efficiency if no incentive provided

 A bar graph chart indicating how likely people said they would be to utilise various energy efficiency measures if an incentive were not offered in each category of equipment. For implementing efficient heating: 48% would definitely have done so without incentives, 22% probably would have, 11% might or might not have, 13% probably would not have and 6% definitely wouldn't have. For fitting a low energy light globe: 29% definitely would have anyway, 33% probably would have, 11% might or might not have, 16% probably wouldn't have and 11% definitely wouldn't have. For installing more efficient water heating, 24% definitely would have anyway, 32% probably would have, 14% might or might not have, 19% probably wouldn't have and 12% definitely wouldn't have. For installing a more efficient shower rose, 23% definitely would have anyway, 26% probably would have, 10% might or might not have, 25% probably wouldn't have 15% definitely wouldn't have and 2% didn't know. The percentages over the total sample for likelihood of undertaking energy efficiency were that 27% definitely would have anyway, 30% probably would have, 11% might or might not have, 19% probably wouldn't have, 12% definitely wouldn't have and 1% were undecided.

A5. How likely do you think you would have been to [ACTIVITY FROM QUOTA] at that time if the incentive was not offered?

Base: Respondents most involved with the scheme who received an incentive, n=803

Regardless of the apparent inconsistency between consumers' perceptions of the role of the ESI scheme, almost a third of participants still claimed that they would not have been likely to carry out the upgrade in the absence of the incentive. This was particularly marked amongst:

  • Those who had shower roses installed – 40% would probably or definitely not upgraded their shower rose/s without an incentive being provided;
  • Those who undertook ESI activities in either 2009 or 2011 (37% in each year would probably or definitely not have upgraded) – this difference was particularly marked in 2009, when 18% of installations definitely would not have been proceeded with, falling back to 7% in 2010 and 10% in 2011; and
  • Those from Hot Regional locations (37%).
    • In such locations the ESI appears to have provided the only incentive for lighting (98%) and shower rose upgrades (93%).

Sources of information about the ESI scheme

Participating consumers have learned of the ESI scheme through a mix of direct "below-the-line" activities (notably door knocking) and more traditional marketing/advertising approaches:

  • In total, 43% of those participating claim to have found out about the ESI scheme through "door knockers", and for a third of all those surveyed this was the initial source of information. In addition to this, a further 11% mentioned explanations given to them by contractors or tradies. Together these elements of AP-initiated marketing represent a substantial source of information about the scheme.
    • Door knockers have been particularly important as a source of awareness in relation to the two low value categories; 74% of lighting and 55% of shower rose participants mentioned them as a source of information, with 60% and 42% respectively obtaining their first information about the scheme through a door knocker.
      • However, door knockers appear to play a very limited information role outside of these two categories, being mentioned by only 4% of water heating and 3% of space heating participants.
    • Apart from these category differences, door knockers were significantly more likely to be the initial source of awareness of the ESI scheme in Melbourne (38% mention them), and for tenants (47% against 32% of home owners).
    • The importance of door knockers also appears to have built since the scheme launched, accounting for 29% of initial awareness for 2009 activities, 31% in 2010, and 40% in 2011.
  • Government advertising was attributed as a source of awareness by 31% of all surveyed participants, and as a primary source by 24%. This was most apparent in relation to water heating, for which 33% of participants claimed government advertising as their primary source of awareness of the scheme. Since the government advertising only ran in 2009, this claimed source of awareness may have been misattributed (possibly from AP advertising, or information obtained from other government information sources, such as websites).
  • Another advertising component that was mentioned was advertising in shopping centres/mail/newspapers/TV; this was only mentioned by 6% of participants as an initial source of awareness, but by 9% of shower rose participants, and 8% of those aged 55 and over. It is likely that a substantial part of this advertising activity would have been initiated by APs, particularly energy retailers.

Chart 19. Sources of information about the ESI scheme

 A pair of bar graph charts indicating a total of how respondents found out about the ESI scheme, and how they found out initially, respectively. For initial learning about the scheme, 33% had a door to door call from a contractor or tradie, 24% were informed by government advertising, 11% were told by friends, relatives or neighbours, 6% had it explained by a contractor or tradie they were using, 6% saw the scheme advertised in shopping centres, by mail, on TV or in newspapers and 1% learned via some other means. Of the total respondents, 43% had a door to door call from a contractor or tradie, 31% were informed by government advertising, 16% were told by friends, relatives of neighbours, 11% had it explained by a contractor or tradie they were using, 7% saw the scheme advertised in shopping centres, by mail, on TV or in newspapers, 6% had it explained by a contractor or tradie's advertising or website, 6% learned through an Internet search, and 1% by other means.

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A6. How did you find out about the Energy Saver Incentive scheme?

A6a. And how would you say you first found out about the scheme?

Base: Respondents most involved with scheme, n=838

APs confirmed that only around 40% of enquiries about ESI activities, on average, had been initiated by them. Proactive approaches were considered by APs to be particularly low in relation to higher value products, such as water and space heating, and insulation; only for low value, high volume categories (lighting, shower roses) was their any indication of highly proactive marketing by APs.

Summary

Prior to the introduction of the ESI, the primary barrier to consumers upgrading their energy efficiency appears to have been inertia – it just wasn't important enough, things were still working well enough, they couldn't see clear benefits. The implication is that the intervention of the ESI may have prompted action that might not have happened otherwise.

When consumers have acted to undertake efficiency upgrades under the scheme, their motivations have been primarily economic (to reduce energy bills, to take advantage of discounts on offer) and environmental; marketing appears to have been a relatively limited spur to action. The strongest incentive has been offering the consumer a free product; the role of government intervention is not being fully acknowledged by APs, since consumers linking the benefit directly with the AP's offer rather than the government's involvement.

Most consumers claim that they would have proceeded to upgrade their energy efficiency without the scheme, although this is slightly at odds with the inertia that had stopped them acting prior to the scheme's introduction. There is also a suggestion that APs may not be aggressively marketing the scheme, or using the cost savings it enables to leverage more upgrade activity; consumers are left with the impression that it was their decision, and it was something they were going to do anyway.

3It should be noted that as VEET is a market based scheme, the level of the incentive is variable and set by the market. Demand is created by a target of savings that generates a liability on energy retailers and supply is provided by the pool of available activities. Retailers are likely to purchase or generate certificates at the lowest price whereby they can satisfy their liability.

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Page last updated: 24/06/20