Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program

56 Pages Posted: 26 Jun 2015  

Meredith Fowlie

University of California, Berkeley

Michael Greenstone

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

Catherine D. Wolfram

University of California, Berkeley - Economic Analysis & Policy Group; National Bureau of Economic Research (NBER)

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Date Written: June 23, 2015

Abstract

Conventional wisdom suggests that energy efficiency (EE) policies are beneficial because they induce investments that pay for themselves and lead to emissions reductions. However, this belief is primarily based on projections from engineering models. This paper reports on the results of an experimental evaluation of the nation’s largest residential EE program conducted on a sample of more than 30,000 households. The findings suggest that the upfront investment costs are about twice the actual energy savings. Further, the model-projected savings are roughly 2.5 times the actual savings. While this might be attributed to the “rebound” effect – when demand for energy end uses increases as a result of greater efficiency – the paper fails to find evidence of significantly higher indoor temperatures at weatherized homes. Even when accounting for the broader societal benefits of energy efficiency investments, the costs still substantially outweigh the benefits; the average rate of return is approximately -9.5% annually.

Keywords: energy, efficiency investments

Suggested Citation

Fowlie, Meredith and Greenstone, Michael and Wolfram, Catherine D., Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program (June 23, 2015). Becker Friedman Institute for Research in Economics Working Paper No. 2621817. Available at SSRN: https://ssrn.com/abstract=2621817 or http://dx.doi.org/10.2139/ssrn.2621817

Meredith Fowlie

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Michael Greenstone (Contact Author)

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Catherine D. Wolfram

University of California, Berkeley - Economic Analysis & Policy Group ( email )

Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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