A shocking finding on energy efficiency cost effectiveness

A study just released from the E2e Project finds that the investment costs in residential energy efficiency greatly exceed the realized benefits.  Earlier the same research program found that even if the energy efficiency measure packages, costing up to $5,000, were given away for free, only 6% of low income homeowners would participate. This is one of the first projects to track from start to finish a full set of energy efficiency projects. Much controversy has swirled around the accuracy of the engineering calculations used to estimate energy savings, and whether market barriers are impeding participation in what appears to be obvious cost saving actions. This study calls into question the premise of “costlessly” promoting energy efficiency actions.

The Project is run jointly by the University of California’s Energy Institute at Haas, the University of Chicago’s EPIC, and MIT.

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3 thoughts on “A shocking finding on energy efficiency cost effectiveness

  1. Pingback: Energy Institute @ Haas takes on DOE weatherization study | Economics Outside the Cube

  2. mcubedecon Post author

    This study has generated a lot of responses, the most important centered on extrapolating from a fairly narrow population of low-income consumers in Michigan. Here’s one response from the ACEEE (http://aceee.org/blog/2015/07/e2e-weatherization-study-generating), and another discussion on the BNA website (http://www.bna.com/weatherization-study-draws-n17179928822/.)

    However, the argument has been that EE programs will carry themselves financially without considering any other co-benefits. And that is what the E2e study focused on. The most disturbing result of the E2e study is that the realized benefits are much smaller than the engineering estimates. That seems to point to a much better empirical validation of the estimation models.

    One element to be considered is what rates are used to compute the savings? In Michigan, the E2e might have use the low-income rates which might be substantially discounted (much like CA). That makes it more difficult to achieve overall cost savings.

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  3. Pingback: Decoupling of economic and electricity demand growth | Economics Outside the Cube

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