Consumer Behavior in Energy-Efficient Homes: The Limited Merits of Energy Performance Ratings as Benchmarks

FCN Working Paper No. 17/2016

35 Pages Posted: 27 Nov 2016

See all articles by Florian Heesen

Florian Heesen

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN)

Reinhard Madlener

RWTH Aachen University

Date Written: November 2016

Abstract

In Germany, policy-induced energy efficiency improvements typically aim at reducing primary energy consumption. Private households, on the contrary, pursue the maximization of wellbeing, or in microeconomics jargon, the maximization of utility of the occupants. There is a marked difference between upfront-calculated energy performance ratings (EPRs) and realized heating energy consumption (HEC). From an energy and environmental policy point of view, a deviation of energy consumption from ex ante calculated EPRs is problematic, as it offers poor guidance for (prospective) homeowners, policy-makers and researchers relying on the EPRs as benchmarks. The EPR-HEC gaps reported are, apart from heterogeneity, i.e. deviations from the mean aggregate values, often attributed to (unanticipated) behavioral effects. From an energy economist’s point of view, energy rebound induced by a decreasing unit price per unit of energy service output is one explanation. The existing literature in this field almost entirely treats building-specific EPRs as universal standards, trying to explain the empirically observed discrepancies. In this paper, we investigate whether and to what extent the current EPR scheme in place in Germany today can address behavioral issues. To this end, we empirically investigate the deviations between EPRs used in regulation and observed HEC levels based on two different data sets for Germany. The results show that it is not necessarily the behavioral dimension, but rather the static and mostly technically guided calculations of the EPRs itself that account for the major part of this deviation. The results obtained and insights gained from our analysis highlight the need for further improvements in the field of EPR regulation and methodology.

Keywords: Energy performance rating, Energy performance gap, Heating energy, Consumer behavior

Suggested Citation

Heesen, Florian and Madlener, Reinhard, Consumer Behavior in Energy-Efficient Homes: The Limited Merits of Energy Performance Ratings as Benchmarks (November 2016). FCN Working Paper No. 17/2016. Available at SSRN: https://ssrn.com/abstract=2874929 or http://dx.doi.org/10.2139/ssrn.2874929

Florian Heesen (Contact Author)

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN) ( email )

Mathieustrasse 6
Aachen, 52074
Germany

Reinhard Madlener

RWTH Aachen University ( email )

School of Business and Economics / E.ON ERC
Mathieustraße 10
Aachen, 52074
Germany
+49 241 80 49 820 (Phone)
+49 241 80 49 829 (Fax)

HOME PAGE: http://www.eonerc.rwth-aachen.de/fcn

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