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Energy Efficiency Investments in the Home: Swiss Homeowners and Expectations about Future Energy Prices

Anna Alberini, Silvia Banfi, and Celine Ramseier

Year: 2013
Volume: Volume 34
Number: Number 1
DOI: 10.5547/01956574.34.1.3
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Abstract:
Using conjoint choice experiments, we surveyed 473 Swiss homeowners about their preferences for energy efficiency home renovations. We find that homeowners are responsive to the upfront costs of the renovation projects, government-offered rebates, savings in energy expenses, time horizon over which such savings would be realized, and thermal comfort improvement. The implicit discount rate is low, ranging from 1.5 to 3%, depending on model specification. This is consistent with Hassett and Metcalf (1993) and Metcalf and Rosenthal (1995), and with the fact that our scenarios contain no uncertainty. Respondents who feel completely uncertain about future energy prices are more likely to select the status quo (no renovations) in any given choice task and weight the costs of the investments more heavily than the financial gains (subsidies and savings on the energy bills). Renovations are more likely when respondents believe that climate change considerations are important determinants of home renovations.



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

Anna Alberini, Will Gans, and Charles Towe

Year: 2016
Volume: Volume 37
Number: Number 1
DOI: 10.5547/01956574.37.1.aalb
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Abstract:
We use a unique dataset that combines an original survey of households, information about the structural characteristics of their homes, utility-provided electricity usage records and program participation status, to study the uptake of energy efficiency incentives and their effect on residential electricity consumption. Attention is restricted to homes where heating and cooling is provided exclusively by air-source heat pumps. We deploy a difference-in-difference study design and find that replacing a heat pump with a new one does reduce electricity usage by 8% on average. The effect differs dramatically across households based upon whether they receive an incentive towards the purchase of a new heat pump. Among incentive recipients, the effect is small, and the larger the incentive, the smaller the reduction in electricity usage. These findings suggest that capital costs are incorporated into the (long-term) cost of energy, generating an apparent rebound effect that is much more pronounced for incentive recipients.



What is the Effect of Fuel Efficiency Information on Car Prices? Evidence from Switzerland

Anna Alberini, Markus Bareit and Massimo Filippini

Year: 2016
Volume: Volume 37
Number: Number 3
DOI: 10.5547/01956574.37.3.aalb
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Abstract:
Inadequate information is often identified as a potential cause for the so-called "energy efficiency gap," i.e., the sluggish pace of investment in energy efficiency technologies, which potentially affects a wide variety of energy-using goods, including road vehicles. To improve the fuel economy of vehicles, in 2003 Switzerland introduced a system of fuel economy and CO2 emissions labels for new passenger cars, based on grades from A (best) to G (worst). We have data for all cars approved for sale in Switzerland from 2000 to 2011. Hedonic regressions suggest that there is a fuel-economy premium, but do not allow us to identify whether the fuel economy label has an additional effect on car price, above and beyond the effect of fuel economy. To circumvent this problem, we turn to a sharp regression discontinuity design based on the mechanism used by the government to assign cars to the fuel economy label, which estimates the effect of the A label on price to be 6-11%. Matching estimators find this effect to be 5%.



Response to Extreme Energy Price Changes: Evidence from Ukraine

Anna Alberini, Olha Khymych, and Milan Šcasný

Year: 2019
Volume: Volume 40
Number: Number 1
DOI: 10.5547/01956574.40.1.aalb
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Abstract:
Large but temporary price increases are sometimes deployed on days when the demand for electricity is extremely high due to exceptionally warm or cold weather. But what happens when the extreme price changes are permanent? Between January 2013 and April 2016, natural gas and electricity prices in Ukraine increased dramatically (up to 300% of the initial rates). We exploit variation in tariffs over time and across customers to estimate the price elasticity of electricity demand using a panel dataset with monthly meter readings from households in Uzhhorod in Ukraine. The price elasticity of electricity demand is -0.2 to -0.5, with the bulk of our estimates around -0.3. The elasticity becomes up to 50% more pronounced over the first three months since prices change. We find only limited evidence that persons who are attentive about their consumption levels, their bills, or the tariffs are more responsive to the price changes.



How Valuable is the Reliability of Residential Electricity Supply in Low-Income Countries? Evidence from Nepal

Anna Alberini, Jevgenijs Steinbuks, and Govinda Timilsina

Year: 2022
Volume: Volume 43
Number: Number 4
DOI: 10.5547/01956574.43.4.aalb
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Abstract:
We use contingent valuation to estimate the willingness to pay (WTP) for improved electricity service in Nepal following the end of the country's load-shedding crisis of 2007–2016. Using a nationally representative survey of grid-connected Nepali households, we calculate the WTP per outage-day avoided and the value of lost load (VoLL) for residential customers and analyze their key drivers, including income, education, and investments in own generation or electricity storage equipment. Households are willing to pay, on average, 123 NR ($1.11) per month for improved quality of power supply. In other words, they would be prepared to see a 65% increase in their monthly bill to avoid outages. Our preferred estimates of the VoLL range from 5 to 15 NR/kWh (¢4.7–¢14/kWh). These estimates are below the marginal cost of avoided load shedding, and are virtually the same as valuations at the beginning of the load-shedding crisis.



What Are the Benefits of Government Assistance with Household Energy Bills? Evidence from Ukraine

Anna Alberini and Nithin Umapathi

Year: 2024
Volume: Volume 45
Number: Number 3
DOI: 10.5547/01956574.45.3.aalb
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Abstract:
On February 24, 2022, Russian Federation troops invaded Ukraine. Ukraine was previously at war with Russia in 2014, and in April 2015, the government abruptly raised the natural gas tariffs to residential customers. It also scaled up its energy assistance program, the HUS. We examine the welfare effects of the HUS. Using Ukraine's Household Budget Survey, we find that after the tariff hike, the average household that did not receive the HUS spends 11% of its income on electricity, gas, and fuels, meeting the definition of "fuel poor." The average share among households that do receive the subsidy is 6–8%. The HUS cuts the rate of fuel poverty in half and brings considerable consumer surplus gains (6% of income), at a price tag of 1–2.5% of GDP. Meaningful savings would be achieved with only a moderate loss of consumer surplus if the HUS was cut in half. Social tariffs or replacing the HUS with a one-time energy efficiency subsidy would be sustainable and entail modest or no welfare losses.





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