Cost-Effectiveness of Electricity Energy Efficiency Programs / Toshi H. Arimura, Shanjun Li, Richard G. Newell, Karen Palmer.

Format:

Book

Author/Creator:

Arimura, Toshi H.

Contributor:

National Bureau of Economic Research.

Li, Shanjun.

Newell, Richard G.

Palmer, Karen.

Series:

Working Paper Series (National Bureau of Economic Research) no. w17556.

NBER working paper series no. w17556

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2011.

Summary:

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 long-term 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.

Notes:

Print version record

October 2011.