Free Riding, Upsizing, and Energy Efficiency Incentives in Maryland Homes

Anna Alberini, Will Gans and Charles Towe ()
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Anna Alberini: AREC, University of Maryand, USA College Park, Fondazione Eni Enrico Mattei (FEEM), Italy and Centre for Energy Policy and Economics (CEPE) at ETH-Zürich, Switzerland
Will Gans: Consultant with NERA, USA

No 2013.82, Working Papers from Fondazione Eni Enrico Mattei

Abstract: We use a unique dataset that combines the responses from an original survey of households, information about the structural characteristics of their homes, utility-provided longitudinal electricity usage records, plus utility program participation information, to study the uptake of energy efficiency incentives and their effect on residential electricity consumption. Attention is restricted to homes where heating and cooling are provided exclusively by heat pumps, which are common in our study area—four counties in Maryland—and were covered by federal, state and utility incentives during our study period (2007-2012). We deploy a difference-in-difference study design. We find that replacing an existing heat pump with a new one does reduce electricity usage: the average treatment effect is an 8% reduction. However, the effect differs dramatically across households based upon whether they receive an incentive towards the purchase of a new heat pump. Among those that receive the purchase incentive, the effect is small or nil, and indeed, the larger the incentive, the smaller the reduction in electricity usage. Those that do not receive incentives reduce usage by about 16%. Our results appear to be driven by the numerous free riders in our sample and by persons who—inferred from their responses to survey questions—might be exploiting the subsidy to purchase a larger system and increase usage, with no emissions reductions benefits to society.

Keywords: Energy Efficiency; Household Behavior; Energy Efficiency Incentives; Electricity Usage; Rebound Effect; Free Rider (search for similar items in EconPapers)
JEL-codes: D12 H3 Q41 (search for similar items in EconPapers)
Date: 2013-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
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Related works:
Journal Article: Free Riding, Upsizing, and Energy Efficiency Incentives in Maryland Homes (2016)
Working Paper: Free Riding, Upsizing, and Energy Efficiency Incentives in Maryland Homes
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2013.82

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