From Cognitive Overload to Optimization of electricity self-consumption: The Impact of a New Digital Tool

In this paper, we investigate how an automated home energy management system (AHEMS), operated through a new app can help consumers optimize their decisions. Optimizing self-consumption is a complex task for prosumers, i.e., households that produce, consume, and sell electricity to the grid, requiring cognitive effort. We study the impact of a novel app that assists prosumers in optimizing the self-consumption by automating the operation of electrical appliance and heating system. The main goals of this paper are twofold: first, to analyze the impact of the electricity price shock resulting from the war in Ukraine in 2022 on the adoption of this app, and secondly, to examine how the adoption of this AHEMS affected self-consumption levels. For this analysis, we employ a Difference-in-Differences model and an IV model using data from approximately 1,200 prosumers in Switzerland, observed in 2022 and 2023. The empirical results indicate that prosumers facing a significant increase in electricity prices increased their adoption of specialized subscriptions that facilitate automated management of electrical appliances by approximately 5%. Furthermore, prosumers with such subscriptions experience 9-11 percentage points higher self-consumption rates than non-subscribers. For a representative prosumer of our sample, this increase in self-consumption provides monetary savings that exceed the cost of the subscription.