Smart meter-related data privacy concerns and dynamic electricity tariffs: Evidence from a stated choice experiment

Abstract

Data privacy concerns are frequently raised to explain households’ reluctance to have smart meters. These meters are a prerequisite for future energy systems as they enable demand-side management measures, such as dynamic electricity tariffs. Consequently, two questions arise: First, what are the determinants of smart meter-related data privacy concerns? Second, how do these concerns affect households’ preferences concerning dynamic electricity tariffs? Based on a representative household survey conducted in Germany, I find linear and negative relationships between privacy concerns and respondents’ general level of trust and technological affinity. Interestingly, high levels of energy-related financial literacy and environmental values are associated with a greater probability of expressing either low or high privacy concerns. Using a choice experiment, I subsequently identify smart meter-related data privacy concerns as a mediating factor in households’ aversion to dynamic pricing. Furthermore, I find heterogeneous effects of additional information regarding the handling of consumption data on respondents’ aversion to dynamic electricity tariffs. Additional information primarily reduced the aversion of respondents with high data privacy concerns. This finding has potentially far-reaching implications for other products and services that utilize information about individual behavior.