Abstract: Behavioral strategies of occupantenergy conservation are essential to counter the effect of growing energydemand. The wide application of occupant energy interventions, such asproviding subsidies to promote energy saving, involves continuous financialinvestments, which has been a particular challenge to subsidy providers, i.e.national energy agencies. Exploring the cost-effective interventions isessential in the case of promoting household energy conservation in the longterm. In this study, a promising strategy to lighten the financial burden ofenergy policy providers - Household Energy Saving Option (HESO) is proposed andvalidated. HESO is an option-based strategy that offers buyers (i.e.households) an opportunity to earn the reward, depending on whether they canachieve the pre-determined energy saving goal. A conceptual framework of HESOis established, which consists of five elements, namely theoretical foundation(T), integrated interventions (I), market premises (M), energy sustainability(E), and stakeholders (S). To test the effectiveness of HESO on household energyreduction, a preliminary experiment was conducted in 101 households living inSingapore and the results demonstrated that HESO has a positive effect onencouraging home electricity conservation based on the Difference-in-Difference(DID) analysis. Compared to the baseline of household energy consumption,HESO-induced energy reduction was 8.18% and 12.56% when saving goals were setat 5% and 10%, respectively. Possible reasons to explain different effects ofHESO on energy reduction have been elaborated, including the effect of positivefeedback and re-adjustment of households’ energy saving motivation during thetransition period. Key determinants of HESO's success have also been discussed,such as management of cash-flow liquidity and design of goal difficulty. HESOshifts costs from energy policy providers to the households who fail to achievetheir goals, which significantly improves the cost-efficiency of residentialenergy reduction strategies. This study contributes to the literature bydeveloping a framework of option-based residential energy saving intervention.The results enlighten a promising and scalable solution by using a marketizedintervention for promoting effective energy conservation in households whileminimizing the cost burden borne by the city government.

Keywords: Building energy efficiency; Household Energy Saving Option; Market-based intervention; Occupant behavior; Residential energy consumption