Energy Efficiency in Buildings Behavioral Issues (1985) / Chapter Skim
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3. The Effectiveness of Residential Conservation Incentives
3. The Effectiveness of Residential Conservation Incentives
Pages 29-52
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From page 29... ...
The Tennessee Valley Authority has provided 3250 million in interest-free loans to its customers (Berry, 1982) , and the Bonneville Power Administration is spending at least that much to hold down residential electricity demand and thus avoid even higher expenses for new power plants.
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restrictions on participation Client Characteristics Household income Number of household members Education Size of home Type of structure Appliance holdings Type of heating and cooling system Fuels used Home ownership Energy-related attitudes and beliefs Outcome Variables Percent of target population attracted to program (e.g., requesting energy audits) Percent of those attracted who use the incentive Investment per household using incentive Incremental energy savings by households using incentive Incremental savings by those attracted to program Administrative cost Unfortunately, very few evaluations contain the full range of information listed above.
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In most instances, a minority of the households that request energy audits take advantage of incentives, and they are the ones that made the most extensive investments. For the programs Hirst cited for which data are available, the costs of retrofit per participant ranged from $1,500 to $2,500 (Hirst, Bronfman, et al., 1983; Hirst, Goeltz, et al ., 1983; Puget Sound Power and Light Company, 1984; Weiss et al ., 19831.
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has reported the findings from loan programs, and we have been able to find only three comparable reports of measured energy savings from grant programs. Participants in the Canadian Home Insulation Program, which offers a grant of 60 percent of the cost of recommended conservation measures, cut energy use 12.8 percent per household compared with an econometric estimate of what the same households would have done in the absence of the program (Energy, Mines, and Resources Canada, 1983~.
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The Southern California Gas Company found about equal preference for an interest-free loan and a credit of about 50 percent (Berry, 1982~. A survey for Seattle City Light found about equal preference for an interest-free loan with payment deferred 10 years and for a combination of a 10 percent grant and a 6 percent loan; however, one-quarter of the respondents did not rank the interestfree loan option among the five choices given (Berry, 1982~.
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In the Low Income Electric Program sponsored by Seattle City Light, 68 percent of the participants said that if the free weatherization program were not available, they would not have taken advantage of a loan program (Newcomb and Weiss, 1983a)
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; interest-free loan programs generate a lower rate of retrofit activity (mean and median, 3 percent per year) ; and partial loan subsidies have the lowest rate of participation (mean, 1 percent per year; median, less than 1 percent)
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Length of Programa Rate of Retrof ittingb (%) Partial Loan Subsidies Northern States Power (Hirst, Goeltz, et al., 1983)
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Buyback (Olsen and Fonseca, 1984) Puget Sound Power Grant (Puget Sound Power and Light Company, 1983, 1984)
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Thus, the value of the subsidy in the Bonneville Pilot or Puget Sound Power and Light zero-interest loan programs is 61 percent at a 10 percent discount rate or 75 percent at a 15 percent discount rate. At the same discount rates, the subsidy value of a partially deferred 10-year Seattle City Light loan is 53 percent or 67 percent and that of a Tennessee Valley Authority 7-year loan is 30 percent or 41 percent.
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Households that will not devote much effort to conservation decisions or that do not trust the local utility company may not request energy audits. The simplicity of the foreign grant programs and their willingness to entrust choices to households may make the programs more attractive.
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However, the loan program is available only to homeowners in electrically heated homes while the grant program, which is not restricted to homeowners, is available to a population almost twice as large. Since renters rarely take advantage of home retrofit~programs, expansion of the program could have been expected to decrease participation rates; thus, the comparison is consistent with the idea that grants are more attractive than loans.
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Table 7 presents results from nine utility companies participating in a New York State-mandated loan subsidy program; Tables 8 and 9 present similar results from zerointerest loan and grant programs administered by the Bonneville Power Administration. In all three programs, there was more than a tenfold variation in program participation rates.
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to qualified customers receiving energy audits; the data are for 1978-1984 from New York State Public Service Commission (1985~. participation, is still highly dependent on nonfinancial factors.
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5.8:1 11.3/1 13.0/1 NOTE: The Weatherization Pilot Program, which operated for 2.5 years between 1981 and 1983, offered zero-interest loans, repayable when the house was sold, to single-family electric heating customers. Households receiving energy audits were offered free water heater insulation wraps, shower flow restrictors, and electric outlet gaskets.
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presented data collected by the state of Minnesota on energy audits in that state's RCS program. Although the program does not provide financial incentives, it is like most incentive programs in the United States in that its effectiveness depends on requests for energy audits.
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And only the community groups contacted households after completing energy audits to encourage them to take the recommended conservation actions. Polich (1984)
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Despite concern about weatherizing low-income housing, most residential conservation programs in the United States have disproportionately attracted higher-income households. This result is consistently reported in evaluations of home energy audit programs (Hirst, Berry, and Soderstrom, 1981)
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From page 47... ...
Similarly, higherincome households were overrepresented among households taking out zero-interest loans under the Bonneville Power Administration's Weatherization Pilot Program (Hirst, Bronfman, et al., 1983) and Puget Sound Power and Light's loan program (McCutcheon, 1983~.
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For example, after the Tennessee Valley Authority realized that only seven percent of the energy audits and six percent of the loans in its zero-interest loan program were going to low-income households, it began using local community groups as outreach agents, distributing specially written promotional material by hand, and promoting energy audits with an offer of three free loaves of bread (Moulton, 1984~. noted above, the promotion effort raised the proportion of audit requests from low-income people to 21 percent after three years.
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The data on loan subsidies 7The highest rate of participation by far was in the one program outside the United States, which is consistent with findings about programs for the general public. m e phenomenon in this case probably has much to do with the community, where two small, demographically stable developments were chosen for the program and where a consortium of public and private local institutions developed the program for its benefits to local employment as well as for energy savings (van der Linden and van Eijk, 1985~.
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Potential clients are attracted to programs that have energy audits conducted by local community groups or other organizations that they trust and that have strong motives to make the program work. Aggressive marketing through word-of-mouth and other attention-getting media increases participation.
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