Rethinking residential energy policy: A review of priorities and directions for effective and equitable demand-side management

The energy transition is driving changes to electricity systems around the world, including renewable generation, decentralisation, and electrification. These changes bring challenges, including increasing intermittent supply, novel dynamics, and increased electricity demand on top of aging infrastructure. Demand-side management (DSM), particularly in the residential sector, can address these challenges, empowering consumers as active participants in the energy system and providing benefits for electricity companies and non-energy sectors, such as healthcare. However, successful DSM must balance technical, economic, and behavioural constraints, and ensure outcomes for heterogeneous consumers are as equitable as possible. This paper reviews current directions in residential DSM and identifies five key considerations for policymakers, energy modellers, electricity companies, and regulators: (i) energy efficiency; (ii) demand response and behavioural dynamics; (iii) electricity pricing; (iv) distributed generation and storage; and (v) social factors and trust. We highlight the need to rethink residential energy policy and suggest specific directions to ensure successful policy implementation in a changing energy landscape and enable a just, equitable, and sustainable energy transition. • Demand-side management (DSM) is key to a just, successful energy transition. • Equity, efficiency, and human behaviour are all important considerations. • Focus on energy efficiency, particularly insulation, drives whole-system benefits. • Agent-based models can improve behavioural accuracy and the design of DSM programs. • Subsidies/incentives should focus on low-income and other marginalised communities.