Contents lists available at ScienceDirect Renewable and Sustainable Energy Reviews journal homepage: www.elsevier.com/locate/rser What makes consumers adopt to innovative energy services in the energy market? A review of incentives and barriers Anna Kowalska-Pyzalska Wroclaw University of Science and Technology, Department of Operations Research, Wyb. Wyspianskiego 27, 50-370 Wroclaw, Poland ARTICLE INFO Keywords: Diffusion of innovation Energy market Incentives and barriers of adoption Innovative energy services Consumer's behavior ABSTRACT The paper provides a review of the incentives and barriers of a successful adoption of innovative energy services (IES) in the energy market. Although IES can have different attributes and roles, they still have a lot in common with each other. On the other hand, the literature suggests that to achieve large market penetration rates of IES, the consumers must be firstly aware of them. They must be also supported by the access to reliable information and advice to limit their confusion of choice. The perceived difficulty of adoption has to be reduced to encourage consumers to get interested in the services. Also the distribution channels of the innovations, namely social influence in the consumers’ social networks and advertisement in mass-media should be effectively used to boost the diffusion. We analyze a great number of research studies, field experiments and mathematical models in order to firstly summarize the findings related to incentives and barriers of IES adoption among customers, then to recognize recent trends in examining these services and modeling and finally to propose some strategies that could boost the diffusion of IES. We argue that to overcome the barriers of adoption, the entities involved in creating and offering IES (e.g. policy makers, energy suppliers and power system operators) should find a way to offer and promote these services together. Such a strategy can bring a synergic effect and increase the financial and non-financial benefits to the consumers and hence increase their interest and engagement. 1. Introduction In the recent years the European Commission (EC), as well as other bodies (e.g. The International Energy Agency) have proposed long-term targets for energy demand reduction and increase of en- ergy efficiency [1,2]. Within the last Communication from November 2016, the EC emphasizes: accelerating the transition to a low-carbon competitive economy is both an urgent necessity and a tremendous op- portunity for Europe. According to [3] Europe needs to step up its in- vestment in energy efficiency and renewable technologies, and the de- velopment of clean energy business models, embracing the new opportunities and consumer empowerment brought about by digitization. This document also highlights that innovations play a great role in realization of these ambitious goals. It is no wonder then, that with such a political and strategic back- ground, the rapid increase of renewable energy and the need to increase energy efficiency at the production, transmission and consumption le- vels led to the development of innovative services in the energy market [4–9], in particular: • technologies based on renewable energy sources (RES): used for local production of electricity and heat; some of them, like PV panels or small wind generators can be installed at consumers’ households, allowing them to produce electricity or heat for their own needs. • green energy tariffs: voluntary or mandatory electricity tariffs that include some share of green energy and are usually more expensive than a typical tariff including only conventional power, • demand response (DR), including incentive and price based programs, like dynamic tariffs (time-of-use, real-time-price tariff, etc.). Their aim is to flatten the demand curve by shifting electricity consump- tion from on-peak to off-peak hours, • smart metering information systems (SM platforms): including smart meters (SM), internet widgets and platforms, smart phone applica- tions, in-home displays designed to share the information about the current electricity prices and its consumption between the house- hold and the energy supplier, • enabling technologies: like, smart plugs, smart appliances or home area networks that optimize and automate the electricity consumption according to its market price and consumers’ requirements. https://doi.org/10.1016/j.rser.2017.10.103 Received 6 October 2016; Received in revised form 20 September 2017; Accepted 28 October 2017 E-mail address: anna.kowalska-pyzalska@pwr.edu.pl. Renewable and Sustainable Energy Reviews 82 (2018) 3570–3581 Available online 14 November 2017 1364-0321/ © 2017 Elsevier Ltd. All rights reserved. T