Cost-effectiveness of electricity energy efficiency programs

Published

Journal Article

We analyze the cost-effectiveness of electric utility ratepayer-funded programs to promote demand-side management (DSM) and energy efficiency (EE) investments. We specify a model that relates electricity demand to previous EE DSM spending, energy prices, income, weather, and other demand factors. In contrast to previous studies, we allow EE DSM spending to have a potential longterm demand effect and explicitly address possible endogeneity in spending. We find that current period EE DSM expenditures reduce electricity demand and that this effect persists for a number of years. Our findings suggest that ratepayer funded DSM expenditures between 1992 and 2006 produced a central estimate of 0.9 percent savings in electricity consumption over that time period and a 1.8 percent savings over all years. These energy savings came at an expected average cost to utilities of roughly 5 cents per kWh saved when future savings are discounted at a 5 percent rate. Copyright © 2012 by the IAEE. All rights reserved.

Full Text

Duke Authors

Cited Authors

  • Arimura, TH; Li, S; Newell, RG; Palmer, K

Published Date

  • August 20, 2012

Published In

Volume / Issue

  • 33 / 2

Start / End Page

  • 63 - 99

International Standard Serial Number (ISSN)

  • 0195-6574

Digital Object Identifier (DOI)

  • 10.5547/01956574.33.2.4

Citation Source

  • Scopus