Can better usage information help households in Vietnam save electricity?

As countries transition to using renewable energy, utility providers face the challenge of managing an increasingly variable electricity supply. One common strategy to address this is through a pricing system that divides energy consumption into blocks, each with a different price per unit. This nonlinear pricing aims to balance equity and efficiency, keeping electricity affordable for low-income households while discouraging excessive consumption.

What is the electricity tariff structure in Vietnam?

Vietnam’s electricity tariffs increase with usage, meaning the more you consume in a billing cycle, the higher the marginal price you pay. But there's a catch: nonlinear pricing can be hard to understand. Many consumers struggle to interpret marginal price signals or fail to pay attention to them altogether. This can blunt the intended conservation benefits of such pricing systems.

Figure 1: Nonlinear electricity pricing structure in Vietnam

Using a digital tool to provide real-time information on electricity consumption

In partnership with EVN Hanoi, a utility provider responsible for the distribution of electricity in Hanoi, we conducted a large-scale experiment to test whether providing better, more frequent information about electricity usage and pricing can influence consumption patterns.

To test whether information clarity could improve household responsiveness to prices, we used the utility’s newly launched mobile app. From the app’s 700,000 users, we randomly assigned 45,000 households to three groups:

1. Control group: No change in information access, and the app showed no information about pricing or billing to date.
2. Price group: App users could view the nonlinear price structure as well as the marginal price faced to date.
3. Bill group: App users could view total consumption and total bill to date.

We provided this additional pricing or billing information for five months, from December 2023 to May 2024. All households had access to daily consumption data through smart meters. 

Figure 2: Experimental app interfaces shown to each group

Do households change their consumption patterns when they have better information?

At first glance, the average treatment effects were statistically insignificant. However, a closer look revealed meaningful variations over time – particularly in how households responded over the course of the monthly billing cycle.

Households in the price group increased electricity use early in the cycle – possibly due to misinterpreting low marginal prices as a signal that electricity was ‘cheap’ – while bill group households reduced consumption, especially toward the end of the billing cycle when projected bills rose, and energy use was nearing higher-priced tiers.

These findings suggest that when it comes to nonlinear pricing, frequent estimated bill feedback may be more effective at curbing usage than marginal price signals alone.

Figure 3: Treatment effects over the course of the billing cycle

What can policymakers learn about pricing and consumer behaviour?

Our results highlight some key insights:

Timing and format of feedback matter: Behavioural responses vary across the billing cycle. Households react more strongly when estimated costs rise near the end of the cycle, suggesting that interventions should consider not just what information is shown, but when and how it is delivered.

• Digital tools can support low-cost interventions: With mobile apps and smart meters becoming more common in low- and middle-income countries, service providers can now communicate with consumers more frequently and effectively. Our study shows this can shift behaviour, particularly when consumers are shown projected bills, not just marginal prices.
• Pricing information must account for cognitive constraints: Nonlinear tariffs are difficult for many households to understand, particularly when future consumption is uncertain. Asking consumers to interpret marginal prices in real time places a high cognitive burden on them. Estimated billing information helps reduce this complexity and allows consumers to make better decisions.

The path ahead for electricity policy in Vietnam

Nonlinear pricing remains a promising tool to promote equitable energy access and conservation. However, it works best when consumers understand it. Our evidence suggests that even simple, scalable nudges – such as bill estimates via mobile apps – can improve responsiveness and reduce energy consumption.

As smart meter adoption expands, policymakers and utility providers have a powerful opportunity to pair technology with behavioural insights. By doing so, they can design pricing systems that not only look good on paper but also deliver results in practice. 

Vietnam's experience serves as an example of how improved communication and clarity of information can empower consumers to be active partners in achieving sustainable and efficient energy use.

Learn more about our work with electricity